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TiliK225 [7]
3 years ago
8

Richard has $500.00 to invest, but he is willing to borrow money to increase the size of his investment. How much should Richard

borrow to construct a portfolio with an expected return of 8% if the risk-free rate is 3% and the expected return of the optimal portfolio is 7%? a. $50.00 b. $100.00 c. $125.00 d. $375.00 e. $625.00
Business
1 answer:
liubo4ka [24]3 years ago
8 0

Answer:

c. $125.00

Explanation:

Let us assume the x for invested in portfolio

Invested proportion × expected return of the optimal portfolio + (1 - invested proportion) × risk free rate = expected return

x × 7% + (1 - x) × 3% = 8%

7% x + 3% - 3% x = 8%

4% x = 5%

X = 1.25

Now the invested amount would be

= 1.25 × $500

= $625

So, the borrowed amount would be

= $625 - $500

= $125

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Answer:

Defamation (Libel or Slander)

Explanation:

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3 years ago
To what extent is there anything positive to be said for bureaucratic structures? Select a large-scale organization of your choi
seropon [69]

Answer:

Even though the bureaucratic structure has received a lot of criticism, it has some advantages. Accountability, predictability, structure and job security are just a few to mention. Furthermore, a bureaucratic culture is based on impersonal relationships, discouraging favoritism

3 0
2 years ago
If a company spends $20 million to install new footwear-making equipment with capacity to produce 1 million pairs of athletic fo
labwork [276]

Answer: 10% or $2,000,000

Explanation:

Seeing as no figures were produced, we will have to do this ourselves.

We will make assumptions which include the following,

Life of the equipment = 10 Years

Salvage value = 0

Those are our 2 assumptions.

In that case then,

The Annual Depreciation will be,

Depreciation = (Cost of equipment - Estimated salvage value) / Estimated useful life

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Seeing as 2 million is,

= 2/20 * 100

= 10%

That would mean that annual depreciation costs at that facility will rise by $2 million or 10%.

If you need any clarification do react or comment.

3 0
3 years ago
Sankey Co. has earnings per share of $3.95. The benchmark PE is 18.8 times. What stock price would you consider appropriate
trapecia [35]

Answer:

Stock price = $74.26

Explanation:

<em>The value of a share can be determined using the price earning ratio model. According to this model, the price of a share is estimated as the EPS of the company multiplied by a representative (benchmark) price- earning (P/E) ratio</em> .

The  ratio relates the price of a stock to its earning. A stock with a higher P/R indicates a high potent for growth.

Price of stock =Earnings per share( EPS) × benchmark P/E ratio  

The appropriate comparative price earnings ratio in the question has been given as 18.8 times.

DATA-

EPS- 3.95

PE- 18.8

Stock price = 3.95 ×  18.8= $74.26

Stock price = $74.26

7 0
3 years ago
On september 1, knack company signed a $50,000, 90-day, 5% note payable with central savings bank. what is the journal entry tha
shepuryov [24]
<span>The Journal entry upon the 90 days (1/4 using 360 days a year) maturity at 5% rate should be $50,000 plus the Interest (I). Let Journal Entry upon Maturity be J Where J = Initial Signed Note + Initial Signed Note * Rate * Time Which is also written as J = Initial signed Note (1 + Rate * Time) Therefore J = 50,000 (1+5/100*1/4) = 50,625</span>
5 0
3 years ago
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