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olganol [36]
3 years ago
8

A stock has a beta of 0.9 and an expected return of 9 percent. A risk-free asset currently earns 4 percent. a. What is the expec

ted return on a portfolio that is equally invested in the two assets?
Business
1 answer:
egoroff_w [7]3 years ago
8 0

Answer:

6.5%

Explanation:

Data given in the question

Beta of the stock = 0.9

Expected return = 9%

A risk-free asset = 4%

By considering the above information, the expected return on a portfolio is

= Risk - free asset × equally basis  + expected rate of return × equally basis

= 4% × 50% + 9% × 50%

= 2% + 4.5%

= 6.5%

Since we have to find out the expected return on equally invested so we considered the risk free asset and the expected rate of return

Therefore we ignored the beta of the stock

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Setler [38]
What ? Getting a good grade I guess or $20 for A+
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3 years ago
Hot Wok Cuisine is a premium Asian restaurant chain that differentiates itself from a large number of competitors by providing e
aleksley [76]

Answer:

monopolistically competitive industry.

Explanation:

this Asian restaurant is likely operating a monopolistically competitive industry. This kind of market structure is a combination of monopoly and competitive market. as it offers products and services which one similar. Also the question says that it has some barriers to entry, which is a characteristic of monopolistically competitive industry. Also goods are similar but not differentiated

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3 years ago
Calculate the dollar rates of return on the following assets: A painting whose price rises from $200,000 to $250,000 in a year.
Gennadij [26K]

Answer

A. 25%

B.8%

C. 1.2%

Explanation:

a)

($250,000 − $200,000)/$200,000 = 0.25 or 25%

b)

($275 − $255)/$255 = 0.08 or 8%

Their was No exchange rate movements involved assets & returns all in U.S. dollars

c.

Step 1: £10,000 * $1.50/£ = $15,000 initial $ investment

Step 2: £10,000 * (1.10) = £11,000 at end of year

Step 3: £11,000 * $1.38/£ = $15,180 at end of year

Step 4: ($15,180 - $15,000)/$15,000 =

0.012, or 1.2%

7 0
3 years ago
You have just received an offer in the mail from Friendly Loans. The company is offering to loan you $4,250 with low monthly pay
Kobotan [32]

Answer:

73 months

approximately 6 years

Explanation:

The period of time it would take to pay off the loan can be determined using excel nper function as below:

=nper(rate,pmt,-pv,fv)

rate is the interest expressed in monthly terms which is 15.3%/12

pmt is the amount payment per month i.e $90

pv is the amount of loan which is $4250

fv is the balance of the loan after all payments have been made i.e $0

=nper(15.3%/12,90,-4250,0)= 73 months

73 months/12 months=approximately 6 years  

8 0
3 years ago
Both Nadia and Samantha are applying to insure their car against theft. Nadia lives in a secure neighborhood, where the probabil
Sergio039 [100]

Answer:

Option B

Explanation:

Both Nadia and Samantha have insured their cars and willing to pay $100 over the expected loss for insurance. If the car is stolen the company would pay expected loss and would earn nothing and if the car is not stolen the company would not be liable for any loss and would earn $200, Therefore the company would earn between $0 and $200.

3 0
3 years ago
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