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chubhunter [2.5K]
3 years ago
14

Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. You are in the proces

s of buying 1,000 shares of Alpha Corp at $10 a share and adding it to your portfolio. Alpha has an expected return of 13.0% and a beta of 1.50. The total value of your current portfolio is $90,000. What will the expected return and beta on the portfolio be after the purchase of the Alpha stock? Group of answer choices 11.20%; 1.23 12.97%; 1.42 12.35%; 1.36 10.64%; 1.17 11.76%; 1.29
Business
1 answer:
sergey [27]3 years ago
7 0

Answer:

The expected return and beta on the portfolio be after the purchase of the Alpha stock will be 11.20%; 1.23

Explanation:

Provided data;

90000 value portfolio with expected returns of 11% and beta of 1.20

($10 × 1000) = 10000 value Alpha Corp added with expected returns of 13% and beta of 1.50.

The new expected portfolio return =

rp = 0.1 × 13% + 0.9 × 11%

rp = 0.1 × 0.13 + 0.9 × 0.11

= 11.20%

The new expected portfolio beta =

bp = 0.1 × 1.50 + 0.9 × 1.20

bp = 1.23

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Answer:

B. the longrun profit would be negative.

Explanation:

A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.  

In the long run, firms earn zero economic profit.  If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.  

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.  

A firm would shut down in the short run if price is less than average variable cost and exit if it  is making a loss

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3 years ago
Justin and Edwardo were hired by the same network support firm. One year later, Edwardo receives a promotion to team leader. Jus
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Answer:

Team skills

Explanation:

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3 years ago
What is the price paid for the use of borrowed money referred to as?
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Interest
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3 years ago
In 1 to 2 paragraphs, analyze how a person's ethics or values might affect his performance on the job.
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Answer:

Explanation:

This question puts together two different perspectives based on different goals and metrics: economics and ethics. In economics, self interest is the driving force and productivity is one of the metrics used by managers and shareholders in measuring their profit making. In ethics, doing good for people and creating social value is the goal. The results cannot be measured anymore in units of productivity.

Peter Drucker in his famous book "Management: tasks, responsibilities, practices" says : "To know what a business is we have to start with its purpose. Its purpose must lie outside of the business itself. In fact, it must lie in society since business enterprise is an organ of society. There is only one valid definition of business purpose: to create a customer." That means to create value for society and not to maximize the profit.

I shall add a recent message sent by Richard Branson - the creator of Virgin Group - in his book "Screw business as usual" : Doing good can help improve your prospects, your profits and your business; and it can change the world." But with a condition: in that firm to exist an organizational culture based on positive values and not on profit maximization. In conclusion, ethics may impact positively on performance if and only if there is a managerial philosophy based on ethics and not on profit maximization, and on value creation. In this well-defined context profit and profitability are consequences and not driving forces of the whole business.

5 0
3 years ago
Pronghorn Corporation purchased machinery on January 1, 2022, at a cost of $276,000. The estimated useful life of the machinery
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Answer and Explanation:

The depreciation schedule is as follows:

<u>For straight-line method</u>

<u>Year    Depreciable       Depreciation   Depreciation Accumul    Book value</u>

<u>                  cost                    rate             Expense         Depre</u>

2022       $243,400             25%            $60,850       $60,850      $215,150

    ($276,000 - $32,600) (1 ÷ 4)                                       ($276,000 - $60,850)

2023      $243,400             25%            $60,850       $121,700      $154,300

2024      $243,400             25%            $60,850       $182,550      $93,450

2025     $243,400              25%            $60,850       $243,400     $32,600

                                                                $243,400

<u>For double declining method</u>

<u>Year    Depreciable       Depreciation   Depreciation Accumul    Book value</u>

<u>                  cost                    rate             Expense         Depre</u>

2022       $276,000       50%            $138,000         $138,000       $138,000

                                   (1 ÷ 4 × 2)                                    

2022       $138,000       50%            $69,000            $207,000      $69,000

2023       $69,000        50%            $34,500            $241,500        $34,500

2024       $34,500                            $1,900               $243,400       $32,600

                                                         $243,400

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