Answer:
Portfolio return = 11.08%
Explanation:
<em>The expected return on the portfolio is the weighted average return of all the different stocks making up the portfolio. The weight of the individual stock would be the relative amount invested in each stock as a proportion of the total fund invested.</em>
The expected return can be determined as follows
Weighted of stock A= 15,200/(15200+23400)=0.39
Weight of stock B = 23.400/((15200+23400)= 0.61
Expected return on portfolio = (0.39 ×8.90% ) + (0.61*12.50%)= 11.08 %
As per the given scenario, the Germany nation has a comparative advantage in producing corn.
<h3>What is comparative advantage?</h3>
Comparative advantage is when one country can produce a good at a lower cost in terms of other goods.
As Germany can produce 6 bushels of corn and the united states can produce 3 bushels of corn in a set period, Germany has a comparative advantage in producing corn.
Learn more about Comparative advantage here:
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Answer:
r = 0.099974 or 9.9974% rounded off to 10.00%
Explanation:
Using the constant growth model of DDM we calculate the price of a stock today which is expected to pay a dividend which increases at a constant rate through out. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price under this model is,
P0 = D1 / r - g
Where,
- r is the required rate of return or cost of equity
- g is the constant growth rate in dividends
Plugging in the available values in the formula, we calculate r to be,
74.11 = 4.63 / (r - 0.0375)
74.11 * (r - 0.0375) = 4.63
74.11r - 2.779125 = 4.63
74.11r = 4.63 + 2.779125
r = 7.409125 / 74.11
r = 0.099974 or 9.9974% rounded off to 10.00%
Answer:
a. increases the real interest rate, which reduces private investment spending.
b. is not a major concern, because the Fed will likely lower the real interest rate when actual output is far below potential.
Explanation:
Increase in government spending means that the government would probably have to borrow money from the credit market. Because the government is so large, it will borrow in large amounts which would force rates to rise. At these higher rates, the private sector might find it too expensive to borrow money and so would be crowed out such that they reduce their investment spending.
When the economy is facing an output that is lower than potential, the Fed will engage in monetary policy aimed at reducing interest rates to improve investment spending. This therefore negates the effect of crowing out which means that it would no longer be a major concern.
