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Umnica [9.8K]
2 years ago
12

Portfolio AB has half of its funds invested in Stock A and half in Stock B. Portfolio ABC has one third of its funds invested in

each of the three stocks. The risk-free rate is 5%, and the market is in equilibrium, so required returns equal expected returns. Which of the following statements is CORRECT?
a) Portfolio ABC's expected return is 10.66667%.
b) Portfolio AB has a standard deviation of 20%.
c) Portfolio ABC has a standard deviation of 20%.
d) Portfolio AB's required return is greater than the required return on Stock A.
e) Portfolio AB's coefficient of variation is greater than 2.0.
Business
1 answer:
Anit [1.1K]2 years ago
5 0

Answer:

a) Portfolio ABC's expected return is 10.66667%.

Explanation:

Some information is missing:

Stock                Expected         Standard             Beta

                         return              deviation

A                            10%                 20%                 1.0

B                            10%                  10%                 1.0

C                            12%                  12%                 1.4

The expected return or portfolio AB = (1/2 x 10%) + (1/2 x 10%) = 10% (it is the same as the required rate for stock A or B)

The expected return or portfolio ABC = (weight of stock A x expected return of stock A) +  (weight of stock B x expected return of stock B) + (weight of stock C x expected return of stock C) = (1/3 x 10%) + (1/3 x 10%) + (1/3 x 12%) = 3.333% + 3.333% + 4% = 10.667% <u>THIS IS CORRECT</u>

Options B, C, D and E are wrong.

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Grover Company has the following data for the production and sale of 1,900 units. Sales price per unit $ 950 per unit Fixed cost
Ad libitum [116K]

Answer:

$415

Explanation:

The computation of the total manufacturing cost per unit is shown below:-

Total manufacturing cost per unit = Direct material + Direct labor + Manufacturing overhead + Fixed manufacturing overhead

= $240 + $100 + $80 + ($370,500 ÷ 1,900)

= $40 + $100 + $80 + $195

= $415

SO, we have applied the above formula.

7 0
3 years ago
Suppose you receive at the end of each year for the next three years. a. If the interest rate is ​, what is the present value of
Furkat [3]

Answer:

the question is missing the numbers, so I looked for a similar question:

Suppose you receive $100 at the end of each year for the next three years. a. If the interest rate is 8%, what is the present value of these cash flows? (Answer: $257) b. What is the future value in three years of the present value you computed in (a)? (Answer: $324.61) c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with your answer in (b)?

a) PV = $100/1.08 + $100/1.08² + $100/1.08³ = $257.71

b) FV = $257.71 x (1 + 8%)³ = $324.64

c) FV = ($100 x 1.08²) + ($100 x 1.08) + $100 = $324.64

it is exactly the same as the answer for (b)

5 0
2 years ago
Cad Cream Inc, an ice cream company, has collaborated with Bite Snack Inc, a food manufacturing company, to come up with a third
tangare [24]

Answer:

A) Joint Venture

Explanation:

Based on the scenario being described within the question it can be said that in this context, Cream Bite Inc. is a Joint Venture. This is a business term that refers to an arrangement between two parties in which both combine their resources in order to meet an agreed upon goal in a more efficient manner and in a much smaller time-frame than if they were to do it separately.

5 0
3 years ago
Read 2 more answers
We are evaluating a project that costs $744,000, has a six-year life, and has no salvage value. Assume that depreciation is stra
yawa3891 [41]

Answer: $15,400

Explanation:

BEP = Fixed cost - depreciation/ sales - variable cost

BEP = 740,000 - (744,000/6)/($60 -$20)

BEP= $740,000-$124,000/$40

BEP = $616,000/$40

BEP =$15,400

8 0
3 years ago
Voiles Company reissued 200 shares of its treasury stock. The treasury stock originally cost $25 per share and was reissued for
Naddika [18.5K]

Answer:

The correct option is A,A. 7,000 = NA + 2,000 - (5,000) NA - NA = NA 7.000 FA

Explanation:

By issuing the treasury stock ,asset,cash to be precise increases by $7000($35*200) which implies a debit to the asset ,hence the $7000 seen on the left hand-side of the equation.

This transaction has no liability impact,as a result liabilities is denoted NA,not applicable.

The par value of the treasury is to be credited to treasury stock with $5,000($25*200).

Lastly the difference between the par value and the issue is credited to paid-in capital from treasury stock i.e($35-$25)*200))=$2000,this is depicted by $2000 in the equation

5 0
3 years ago
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