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Semenov [28]
3 years ago
14

Suppose that borrowing is restricted so that the zero-beta version of the CAPM holds. The expected return on the market portfoli

o is 17%, and on the zero-beta portfolio it is 8%. What is the expected return on a portfolio with a beta of .6?
Business
1 answer:
raketka [301]3 years ago
3 0

Answer:

10.4%

Explanation:

The computation of expected return on a portfolio is shown below:-

Expected return = Risk Free return + 5%Beta ( Market Return - Risk Free return)

= 5% + 0.60 × (17% - 8%)

= 5% + 5.4%

= 10.4%

Therefore for computing the expected return on a portfolio with a beta of .6 we simply applied the above formula.

The market return less risk free return is known as market risk premium

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A trader wants to gain a profit by expecting a significant move in either direction of the underlying stock. Which strategy best
alexira [117]

The best strategy for this trader, who wants to profit from either direction of the underlying stock, is <em>A. Long Put and C. Short Call.</em>

In securities trading, a call option gives the trader the <em>right to purchase </em>underlying security <em>without any obligation</em>.  On the other hand, a put option grants the trader the <em>right to sell</em> the underlying security <em>without any obligation</em>.

Thus, the trader will profit by using options A and C.

Learn more: brainly.com/question/24767538

3 0
3 years ago
Consider a second-price, sealed-bid auction with a seller who has one unit of the object which he values at s and two buyers 1,
dybincka [34]

Answer and Explanation:

Given that this is a second price bid auction whereby the second highest bid is the price that the highest bidder pays for the item up for auction sale, so that b1>b2 then b1 gets item for the price of b2.

Truthfulness of true value is the dominant strategy here which means each player should aim to be truthful with their bid regarding their true value regardless of what other bidders are bidding. Therefore truthfulness of value is the optimal strategy with the best payoff for bidders

5 0
3 years ago
Lists two things that both increase the money supply?
DENIUS [597]

Answer:

Decrease is taxes

Increase in government spending

Explanation:

Government policies that increases the money supply in an economy is known as expansionary fiscal policy. They are:

1. Decrease is taxes - when government reduces the tax rate, the amount paid as taxes falls and as a result individuals, companies have higher disposable income whuch can be used for consumption or saving. This increases the money supply in the economy.

2. Increase in government spending - if the government increases it's spending on public goods for example, money supply would increase. If the government constructs a road, labour would be employed and paid wages. This payment increases the income of Labour and money supply increases.

Central bank policies that increases money supply are known as expansionary monetary policies. They include:

1. Open market purchase: The central bank purchase securities from the open market to increase money supply.

2. Reduction in reserve requirement ratio : if the reserve requirement ratio is reduced , commercial banks would have more money to give out as loans and this would increase money supply.

6 0
3 years ago
A firm has inventory of $46,500, accounts payable of $17,400, cash of $1,250, net fixed assets of $318,650, long-term debt of $1
Vedmedyk [2.9K]

Answer:

The common-size percentage of the equity is c. 66.87 percent

Explanation:

Total asset of the firm = Inventory + Cash + Net fixed assets + Accounts receivable = $46,500 + $1,250 + $318,650 + $16,600 = $383,000

Liabilities = Accounts payable + Long-term debt = $17,400 + $109,500 = $126,900

Basing on Accounting Equation Formula :

Total Assets = Liabilities + Owner’s Equity

Owner’s Equity = Total Assets - Liabilities = $383,000 - $126,900 = $256,100

The common-size percentage of the equity = ($256,100/$383,000) x 100% = 66.87%

6 0
3 years ago
Type the correct answer in the box. Spell all words correctly. What are the handheld devices that serve as personal information
asambeis [7]

Answer: Personal Digital Assistants

Explanation:

Personal Digital Assistants are a range of small handheld mobile devices that used to be very popular with working class people as they provide computing and storage uses which are very important in the business world for purposes such as keeping schedules and address books. They were like mini-computers that had small keyboards and sometimes a sensitive pad that could be written on.

Usually termed the 'first Smartphones', PDAs were immensely popular in the 90s and the early 2000s but have since been largely replaced by Smartphones which can perform all their duties and more.

4 0
3 years ago
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