The following is part of the computer output from a regression of monthly returns on Waterworks stock against the S&P 500 index. A hedge fund manager believes that Waterworks is underpriced, with an alpha of 2% over the coming month.
Beta = 0.75
R-square = 0.65
Standard Deviation of Residuals = 0.06 (i.e., 6% monthly)
Assuming that monthly returns are approximately normally distributed, what is theprobability that this market-neutral strategy will lose money over the next month?
Assume the risk-free rate is .5% per month.
Answer:
0.33853
Explanation:
Given that, the expected rate of return of the market-neutral position is equal to the risk-free rate plus the alpha:
0.5%+ 2.0% = 2.5%
Hence, since we assume that monthly returns are approximately normally distributed.
The z-value for a rate of return of zero is
−2.5%/6.0% = −0.4167
Therefore, the probability of a negative return is N(−0.4167) = 0.33853
Answer:
The statement is true.
Explanation:
Product placement is a strategy that uses mass electronic media, such as television, you tube and social media video ads that can reach a vast amount of people to market their product.
The specialty of this this strategy is that it embeds the brand into another/ separate work, such as a drama, movie, a music video etc.
This is a great way to grab the attention of the fans/viewers of such entertainment material and this gives the band a certain degree of "approval" from those celebrities who perform in such entertaining events (if the brand is included in a movie or a song).
Answer:
4.77 × 10^-4
Explanation:
Given that
Population of the city of Atlantis on March 30, 2003 = 193,000
No. of new active cases of TB occurring between January 1 and June 30, 2003 = 92
No. of active TB cases according to the city register on June 30, 2003 = 338
So, the incident rate of active cases is shown below:
= (No. of new active cases of TB occurring between January 1 and June 30, 2003) ÷ (Population of the city of Atlantis on March 30, 2003 - No. of active TB cases according to the city register on June 30, 2003)
= (92) ÷ (193,000 - 338)
= (92) ÷ (192,662)
= 4.77 × 10^-4
Answer:
June 30, repurchase of 100 shares:
Dr Treasury stock 4,000
Cr Cash 4,000
Explanation:
The other journal entries should be as follows
July 20, resale of 50 shares:
Dr Cash 2,300
Cr Treasury stock 2,000
Cr Additional paid in capital 300
August 1, resale of 20 shares:
Dr Cash 760
Dr Additional paid in capital 40
Cr Treasury stock 800
