Answer:
The degree to which the portfolio variance is reduced depends on the degree of correlation between securities is the correct answer.
Explanation:
Answer:
The interest accrued is $2,500.
Explanation:
The income accrued will arise after the date of purchase (May 1) of the bonds to the ending date of the accounting period (December 31). This duration is equal to 8 months.`
For the first four months (May 1 to September 1) the income accrued will be the income received semiannually for these four month:
Income Accrued = $60,000 * 6/12 * 5% = $1,500 Because the payment that will be received will be $1000 which belongs to 6 months starting from March 1 and ending at September 1.
And for the remainder 4 months (September 1 to December 31)
Income Accrued = $60,000 * 4/12 * 5% = $1,000
So the total income accrued for the year will be $2,500
Answer:
True
Explanation:
That is true for any product but luxury products.
Answer:
15.0%.
Explanation:
The formula to compute the annual rate of return is shown below:
= Annual net income ÷ average investment
where,
Annual net income is $30,000
And, the average investment would be
= (Initial investment + salvage value) ÷ 2
= ($400,000 + $0) ÷ 2
= $400,000 ÷ 2
= $200,000
Now put these values to the above formula
So, the rate would equal to
= $30,000 ÷ $200,000
= 15%
Answer:
At the rate of return of 18%, the purchase of the new machine is not convenient.
Explanation:
Giving the following information:
Simone Company is considering the purchase of a new machine costing $50,000. It is expected to save $9,000 cash per year for 10 years, has an estimated useful life of 10 years, and no salvage value. Management will not make any investment unless at least an 18% rate of return can be earned.
We need to find the net present value using the following formula:
NPV= -Io + ∑[Cf/(1+i)^n]
Cf= cash flow
NPV= -50,000 + 9,000/1.18 + 9,000/1.18^2 + 9,000/1.18^3 + ... + 9,000/1.18^10
NPV= -9,553
At the rate of return of 18%, the purchase of the new machine is not convenient. It will produce a loss in value.
