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iVinArrow [24]
3 years ago
10

The two stocks in your portfolio, X and Y, have independent returns, so the correlation between them, rXY is zero. Your portfoli

o consists of $50,000 invested in Stock X and $50,000 invested in Stock Y. Both stocks have an expected return of 15%, betas of 1.6, and standard deviations of 30%. Which of the following statements best describes the characteristics of your 2-stock portfolio?
a. Your portfolio has a standard deviation greater than 30% and a beta equal to 1.6.
b. Your portfolio has a beta equal to 1.6, and its expected return is 15%.
c. Your portfolio has a beta greater than 1.6, and its expected return is greater than 15%.
d. Your portfolio has a standard deviation of 30%, and its expected return is 15%.
e. Your portfolio has a standard deviation less than 30%, and its beta is greater than 1.6.
Business
1 answer:
melamori03 [73]3 years ago
6 0

Answer:

B

Explanation:

Beta of a portfolio is given by adding the some of the beta of each stock multiplied by the weights

Overall investment equals $50000+$50000=$100000

which gives Wx=50000/100000=0.5

                    Wy=50000/100000=0.5

Bp=Wx*Bx)+(Wy*By)

     =(0.5*1.6)+(0.5*1.6)

     =1.6

The expected return calculated by sum of weight multiplied by expected return

Er=(0.5*15%)+(0.5*15%)

    =15%

The portfolio has a beta equal to 1.6 and expected return equal to 15%

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As time passes, fixed assets other than land lose their capacity to provide useful services. To account for this decrease in use
alexgriva [62]

Answer:

Depreciation

Explanation:

Depreciation is the systematic allocation of estimated cost to an asset. Methods include straight line, sum of the year digits, double declining etc. The entries for recognizing this cost are;

Debit depreciation expense

Credit Accumulated depreciation

Hence to account for this decrease in usefulness, the cost of fixed assets is systematically allocated to expense through a process called depreciation.

6 0
2 years ago
Donna, the office manager, spends a large part of her day working closely with those whom she supervises to successfully accompl
Ber [7]

Answer: human managerial skill

Explanation: These skills refers to the ability of a manager to relate, interact with his or her subordinates effectively. These are considered as an important trait in managers as per modern business environment.

     In the given case, Donna works closely with her subordinates as well as with other departments and get better results. Therefore, we can conclude that she is exhibiting human relations skills as she considers the comfort of others and tries to maintain healthy relationships with them.

3 0
3 years ago
As a salesperson asks questions about a prospect's transportation system, the prospect says, "What I really want is reliable tra
yarga [219]

Answer: Option (A)

Explanation:

Adaptive selling is referred to as the change in the sales attitude that is based on the circumstances. A well defined appropriate sales strategy is thereby  required so as to successfully sell commodities to their respective consumers. This involves being pliable so as to know when to propose solutions and thus when to further ask for data and information.

5 0
3 years ago
Blackstone Technology is planning to invest in some project using external equity. The company has a beta of 1.1. The return on
Salsk061 [2.6K]

Answer:

Cost of equity = 19.1 %

Explanation:

Cost of equity = required rate of return + flotation cost

The Capital assets pricing model would be used to determined  the required rate of return

<em>The capital asset pricing model (CAPM): relates the price of a share to the market risk or systematic risk. The systematic risk is that which affects all the all the economic agents, e.g inflation, interest rate e.t.c  </em>

Using the CAPM , the required rate of return is given as follows:  

E(r)= Rf +β(Rm-Rf)  

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β- Beta

Rm- Return on market

Rf- Risk-free rate

DATA

E(r) =? , Rf- 3%, Rm-14% , β- 1.1, flotation cost - 4%

E(r) = 3% + 1.1× (14% - 3%) = 15.1 %

Cost of equity = required rate of return + flotation cost

                        = 15.1 % + 4% = 19.1 %

Cost of equity = 19.1 %

7 0
3 years ago
Based on the corporate valuation model, the total corporate value of chen lin inc. is $900 million. its balance sheet shows $110
____ [38]

Stock price would be equal to total value of equity divided by no. of shares outstanding. The total value of equity would be calculated as follows:

Total value of equity = corporate value – notes payable – long term debt – preferred stock

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The price of the stock would be:

Stock price = total value of equity / no. of shares outstanding

= $680 million / 25 million

= $27.20

4 0
3 years ago
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