Answer:
Difference = 2.36% (Option e)
Explanation:
Formula:
WACC = Re*(E/V) + Rd*(D/V)*(1-t)
<u>Data (In Million) Book Value Market Value
</u>
E = Equity $65.00 $225.00 ($22.50 x 10)
D = Debt $45.00 $50.00
V = Value = E + D $110.00 $275.00
Re = Equity Rate 14% 14%
Rd = Debt Rate 6% 6%
T = Tax Rate 40% 40%
WACC Book Value:
WACC = 14%*(65/110) + 6%*(45/110)*(1-0.40)
WACC = 8.27273% + 1.47273%
WACC = 9.75%
WACC Market Value:
WACC = 14%*(225/275) + 6%*(50/275)*(1-0.40)
WACC = 11.45455% + 0.65455
%
WACC = 12.11%
Difference = 12.11% - 9.75 = 2.36% (Option e)
Answer:
Consider the following explanation and calculation
Explanation:
In the existing portfolio, the risk or standard deviation is 28%
The Correlation Coefficients(CorC) of the 4 stocks in the portfolio is 0.4
Higher the CorC higher the risk of the portfolio.
The market standard deviation is 20%, which is below the current portfolio SD
The 40 stocks being added to the portfolio have a lower CorC of 0.3 (than the 0.4 of the existing stocks).
Since we are adding stocks with lower SD (20% market average) and lower CorC, this would bring down the risk of the portfolio.
This would narrow down to the options B and D.
But since no stock being added has a negative CorC, the possibility of the risk being cancelled (to 0%) is not present.
So the correct option is B.
Other way to look at it would be adding more and more stock from the market to the portfolio will bring the portfolio itself more and more closer to the market itself aligning the SD of portfolio equal to the market which is 20%
Answer:
A. Managerial
Explanation:
Based on the information provided within the question I would place Jenny at the managerial level. This is basically due to the fact that all her tasks are tasks usually completed by managerial level employees within a company. Managerial employees are in charge of Planning, Organizing, Leading and Controlling those employees that are underneath them in the organizational pyramid. All done in order to reach organizational goals.
Answer:
Demotivation
Explanation:
Since Arthur has been working for 3 months and he is in a company where he is aware not knowing much about it, he is beginning to feel a lack of interest and passion about his work.
Answer:
The correct answer is option c.
Explanation:
A competitive firm has been selling its output for $20 per unit and has been maximizing its profit, which is positive.
The price falls to $18, and the firm makes whatever adjustments are necessary to maximize its profit at the lower price.
A competitive firm will produce at the point where the marginal cost is equal to price. When the price is lowered the firm will produce at a point with lower marginal cost.
It will thus produce lesser output than what it was producing earlier. So the quantity of output will be lower than previously.
