1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Fiesta28 [93]
3 years ago
13

John Q. Investor manages an equity portfolio with a market value of $3,000,000. The portfolio beta is 1.6. John Q. finds this so

mewhat overly aggressive for the client's risk profile and sells 25 DJIA futures contracts. The contract is defined as $10 times index and is currently trading at 15379. John Q. anticipates that this hedge will reduce the portfolio beta to ___?
Business
1 answer:
Lubov Fominskaja [6]3 years ago
7 0

Answer:

Portfolio Beta  = 1.2815

Explanation:

given data

market value = $3,000,000

portfolio beta = 1.6

sells = 25

times index = $10

currently trading = 15379

to find out

anticipates that this hedge will reduce the portfolio beta to

solution

we get number of contract to sell is here

number of contract to sell = Portfolio Beta × \frac{Portfolio\ value}{index\ value\ * multiplier}      ......................1

put here value we get

25 = Portfolio Beta × \frac{3,000,000}{15379 * 10}

solve it we get

Portfolio Beta  = 1.2815

You might be interested in
_____ season in a tourist destination includes the in-between times of spring and fall.
Zanzabum

Answer:

The correct answer is the option C: shoulder.

Explanation:

<em>Shoulder seasons</em> is the name given, in tourist destinatios, to the season that includes <em>the time in between both spring and fall</em>, therefore high and low seasons. Common characteristics of this type of season is that<em> less people is founded there</em>, but there still are a bunch that moves the economy of the place, <em>also the prices are not too expensive</em> but nither too cheap and to add more, <em>the wheather can be mild</em> most of the time.  

6 0
3 years ago
Sommer, Inc., is considering a project that will result in initial aftertax cash savings of $1.79 million at the end of the firs
iren [92.7K]

Answer:

Maximum initial cost would be $58,116,883.12

Explanation:

1,790,000 increased at 3%

WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})

Ke 0.119 + 0.02 = 0.139

ER 0.15

Kd(after-tax) Kd(1-t) = 0.047

DR 0.85

WACC = 0.139(0.15) + 0.047(.85)

WACC 0.06080

Now that we have the rate, we calculate the present value using the gordon method

1,790,000 / (0.06080-0.03) = 58,116,883.12

4 0
3 years ago
Caroline Perfumes is a premium, exotic women's fragrance company. The manufacturers of Caroline Perfumes
mash [69]

Answer:

c. To focus on establishing a brand name

Explanation:

Specialty products are products that people want to buy because they are unique and are from a certain brand they prefer. According to this, the answer is that in this case, the objective of the  manufacturers of Caroline Perfumes would be to focus on establishing a brand name because that would create customers' loyalty and they would be willing to make an effort to buy the product.

7 0
4 years ago
If you have to dial "9" to get an outside line, you know the telephone system in use is some form of _______ system
Mariulka [41]
Form of PBX system......

6 0
3 years ago
Every year, the Office of Federal Student Aid and various educational institutions across the nation work together to help needy
Schach [20]

Answer:

<u><em>The answer is</em></u>: <u>True.</u>

Explanation:

<u>There are several sources that offer financial aid to help students. </u>

Financial aid can come from federal sources, from the state, from educational or private institutions that help you pay for the university or professional institute.

The federal government offers several financial aid programs. Federal student aid covers expenses such as tuition and fees, room and board, books and supplies, as well as transportation. It can also help pay other related expenses, such as a computer and caring for dependents.

The U.S. Department of Education grants more than $ 120 billion a year in scholarships and grants, funds for the Study and Work Program, and low interest loans to more than 13 million students.

Thousands of educational institutions across the country participate in federal student aid programs.

<u><em>The answer is</em></u>: <u>True.</u>

4 0
3 years ago
Read 2 more answers
Other questions:
  • Jazz Co. pays a dividend of $2,300 Required: For the transaction above, complete the following: (a) Select the accounts that are
    5·1 answer
  • You have just been offered a promotion that your friend and coworker, latasha, has been hoping for. latasha knows that you had a
    8·1 answer
  • "company has 300,000 shares of common stock outstanding that is currently selling at a price of $100 per share. The company has
    6·1 answer
  • Mcmurtry Corporation sells a product for $280 per unit. The product's current sales are 13,900 units and its break-even sales ar
    12·1 answer
  • Diana is running a successful remarketing campaign. She wants to expand her reach with other targeting options. While creating a
    12·1 answer
  • The required steps in the accounting cycle are listed in random order below. List the steps in proper sequence.(a) Prepare a pos
    14·1 answer
  • Which one of the following statements is true? Debt instruments offer residual claims to future cash payouts. Bonds with call pr
    14·1 answer
  • Suppose there are two cities that have rent controlled apartments. In one city (Albany) all apartments are subject to rent contr
    11·1 answer
  • The volume dimension of Big Data refers to the amount of data being collected. a. the pace of data flow, both in and out of a fi
    13·1 answer
  • 4. What type of promotions do you think are most effective in the sports and
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!