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
Nitella [24]
3 years ago
11

We would like to invest $10,000 into shares of companies XX and YY.

Business
1 answer:
garri49 [273]3 years ago
5 0

Answer:

c. $5,000 into each company

Explanation:

Let X be the actual (random) return from each share of XX, and  Y be the actual return from each share of YY. Computing the returns from each option:

A) Investing $10,000 into XX

Given that variance = (standard deviation)²

Since XX cost $20 per share, only 500 shares can be bought.

Expected value = 500 * E(x) = 500 * 1 = 500

Variance = 500² * Var(x) = 500² * 0.5² = 62500

B) Investing $10,000 into YY

Since YY cost $50 per share, only 200 shares can be bought.

Expected value = 200 * E(y) = 200 * 2.5 = 500

Variance = 200² * Var(y) = 200² * 1² = 40000

C) Investing $5,000 into each company

Since XX cost $20 per share and YY cost $50 per share, only 250 shares of XX and 100 shares of YY can be bought.

Expected value = 250 * E(x) + 100 * E(y) = 250 * 1 + 100 * 2.5 = 500

Variance = 250² * Var(x) + 100² * Var(y) = 250² * 0.5² + 100² * 1 = 25625

Since all options have the same expected return, but option C has the lowest variance hence it is the least riskiest. So the best option is C

You might be interested in
A company wishes to raise $27 million by issuing 15-year semi-annual coupon bonds with face value of $1,000 and coupon rate of 6
Evgen [1.6K]

Answer:

We first need to find out the present value of each $1,000 bond and then we can figure out how many of these bonds we require to raise $27 million

The n of payments is 15*2 because semi annual payments for 15 years so our N will be 30

The YTM is 7.70/2 because of semi annual payments = 3.85

The Face value is of 1,000 so FV= 1,000

The payments our 1000*0.066=66 divided by 2 because semi annual payments so PMT= 33

We will put these values in a financial calculator to compute the PV of a $1000 bond.

PV= 903

So now we know that the company can get $903 for each $1,000 bond as the bonds present value is 903.

Now in order to find out how many bonds need to be issued to raise 27 million we will divide 27 million by 903, as 903 is the amount we can raise by issuing a single bond.

27,000,000/903=29,900.3 so 29,901

The company will have to issue 29,901 bonds of face value $1,000 to raise $27 million

Explanation:

3 0
3 years ago
Amarillo Company experienced the following events during its first accounting period. (1) Purchased $5,000 of inventory on accou
Alik [6]

Answer:

$4,000

Explanation:

The computation of the cash to be required to settle the liability is shown below:

= Purchase value of inventory - returned inventory which was purchased

= $5,000 - $1,000

= $4,000

It is a net purchase plus it is the cash required to settle the liability

There is no discount applied in the question as dates are not given so we ignored it.

4 0
3 years ago
According to the video, which tasks do Urban and Regional Planners perform? Check all that apply.
Anit [1.1K]

Answer:

Wat

Explanation:

4 0
3 years ago
Read 2 more answers
What drawbacks will you mention to your supervisor?
Daniel [21]

Answer:

A.IM presents the possibility of privileged information being discussed in public forums.

B.IM can be an additional workplace distraction that keeps employees from focusing on tasks.

Explanation: IM(instant messaging) is a kind of Communication channel or platform that allows you to create Private chartroom with others such as your colleagues. Instant messaging alerts you to inform you that someone in your connections is available online to chat if need be you will enter into a chat Section with him or her,instant messaging is a text based Communication platform.

6 0
3 years ago
On July​ 1, 2019, Montana Company has bonds with balances as shown below. Bonds Payable 66,000 Discount on Bonds Payable 3,800 I
Otrada [13]

Answer:

Loss on the retirement of $4,750

Explanation:

The following have the effect on the income statement which is a loss on the retirement and it amounts to $4,750

It is computed as:

Loss on retirement = Retirement value of the bonds - Issued price of the bonds

= $71,150 - $66,400

= $4,750

Working Note:

Issued Price of bonds = Face value - Discount on bonds payable

= $70,000 - $3,600

= $66,400

7 0
3 years ago
Other questions:
  • Chet asked drew if he could borrow a book. drew agrees and says that he will bring it to chet's room by 7 p.m. that night. when
    14·1 answer
  • Peninsula Company reported net income of $290,000 for the year. During the year, accounts receivable increased by $21,000, accou
    15·1 answer
  • In Bovania, cattle compose 48 percent of the consumer price index (CPI), housing composes 32 percent, and entertainment accounts
    11·1 answer
  • Toby, owner of a cupcake shop in New York, is considering opening a similar business (i.e., a cupcake shop) in Phoenix. After sp
    5·1 answer
  • Economists normally assume that the goal of a firm is to
    15·1 answer
  • What is the most appropriate thing to do when you arrive at a table with a family praying while delivering food in a restaurant?
    14·1 answer
  • Marcus can afford a monthly mortgage payment of $900. If he is eligible for a 30-year, 5% mortgage (where the mortgage factor is
    10·1 answer
  • Elston Company issued $500,000 of eight percent, 20-year bonds at 106 on January 1, 2010. Interest is payable semiannually on Ju
    12·1 answer
  • (Vetro Inc) Vetro Inc. is a glass manufacturer that produces glasses of every shape and type. Recently it signed a contract to s
    14·1 answer
  • Boots Plus has two product​ lines: Hiking boots and Fashion boots. Income statement data for the most recent year​ follow: Total
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!