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AURORKA [14]
2 years ago
6

UPS, a delivery services company, has a beta of 1.6, and Wal-Mart has a beta of 0.9. The risk-free rate of interest is 6% and th

e market risk premium is 9%. What is the expected return on a portfolio with 40% of its money in UPS and the balance in Wal-Mart?
Business
1 answer:
11111nata11111 [884]2 years ago
7 0

Answer:

16.62%

Explanation:

First, use CAPM to find the expected return of each stock;

r= risk free + beta (market risk premium)

<u>UPS;</u>

r = 0.06 +(1.6*0.09)

r = 0.204 or 20.4%

<u>Walmart;</u>

r = 0.06 + (0.9*0.09)

r = 0.141 or 14.1%

Next find the return of portfolio;

Let  UPS be represented by <em>U </em>and Wal-Mart by <em>W</em>

rP = wU*rU + wW*rW

P= portfolio

w= weight of...

r = return of....

rP = (0.40*0.204) + (0.60 * 0.141)

rP = 0.0816 + 0.0846

rP = 0.1662 or 16.62%

Therefore, the expected return on a portfolio  is 16.62%

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Kelley Company reports $1,250,000 of net income for 2017 and declares $175,000 of cash dividends on its preferred stock for 2017
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Answer:

Net income available to common stockholders is $1,075,000

Explanation:

Net Income                            $1,250,000

To Preferred Shareholders   <u>$175,000    </u>

Net income available to       <u>$1,075,000</u>

common stockholders

Basic earnings per share = Net income available to common stockholders / weighted average shares of common stock

Basic earnings per share = $1,075,000 / 380,000

Basic earnings per share = $2.8290 per share.

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3 years ago
All of the following are functions of a knowledge management system EXCEPT: a. designing information systems. b. improving colla
Alika [10]

Answer:

designing information systems

Explanation:

knowledge management system are system designed to managed the knowledge of a company. The design of IT Systems is not under it scope.

7 0
3 years ago
Those who believe in
larisa86 [58]

Answer:

C. The government can change the reserve

ratio.

5 0
2 years ago
"You want to invest your savings of $20,000 in government securities for the next 2 years. Currently, you can invest either in a
JulijaS [17]

Answer:

Explanation:

In the former case that is investment in security that pays interest of 8% per year for the next 2 years , there is provision of fixed interest rate . That means one can be assured of interest rate of 8 % for two years but he can not get benefit of market fluctuation if interest rate if it  rises above 8 % after one year .

In case of investment in  security that matures in 1 year but pays only 6% interest , one can take the benefit of market fluctuation if interest rate rises above 8 % . So if there is likelihood that interest rate can rise above 8 % in future , one should invest in 6% security for one year and reinvest it after one year , in the same security or in other security which fetches higher rate of interest .

Apart from that , if there is a contingent liability of paying after one year , one can not go in for 2 year security as it will have to break prematurely , that will result in loss of interest .

So due to situation described above,  one should prefer investment in one year security .

6 0
2 years ago
which if the following may not be purchased on margin but can be used as collateral for a margin loan after being held for 30 da
inn [45]

A mutual funds is the instrument that may not be purchased on margin but can be used as collateral for a margin loan after being held for 30 days.

<h3>What is purchased on margin?</h3>

This generally involves the act of getting a loan from your brokerage and then, using the money from such loan to invest in more securities than you can buy with your available cash.

Through the method, an investors can amplify their returns if their investments outperform the cost of the loan itself.

In conclusion, the mutual funds can be purchased on margin. However, it  may be used as collateral for a margin loan after being held for 30 days.

Read more about mutual funds

brainly.com/question/4521829

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3 0
1 year ago
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