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olga_2 [115]
3 years ago
7

You hold a diversified portfolio consisting of a $10,000 investment in each of 15 different common stocks (i.e., your total inve

stment is $150,000). The portfolio beta is equal to 1.3 . You have decided to sell one of your stocks which has a beta equal to 1.6 for $10,000. You plan to use the proceeds to purchase another stock which has a beta equal to 1.3 . What will be the beta of the new portfolio
Business
1 answer:
yarga [219]3 years ago
7 0

Answer: 1.28

Explanation:

The portfolio beta is a weighted average of the investments in the portfolio.

The new beta will therefore be;

= Portfolio beta - weighted beta of stock being sold + weighted beta of stock to be added

= 1.3 + ( 10,000/150,000 * 1.6) + ( 1.3 * 10,000/150,000)

= 1.3 - 0.11 + 0.09

= 1.28

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3 years ago
RedEx Shipping determined the rate to apply overhead based on direct labor hours would be $5.40, and based on machine hours woul
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Answer:

Manufacturing cost= $92.5

Explanation:

Giving the following information:

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Job 664:

2.5 machine hours

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<u>To allocate overhead, we need to use the following formula:</u>

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3 years ago
Define agency costs, and describe agency costs of financial distress and agency benefits of leverage
Aleks04 [339]

Answer:

In accounting, agency costs are the costs of hiring an agent in order for him/her to act on behalf of a principal. In finance, agency costs are much broader since they imply costs that may appear due to conflicts of interests between the agent and the principal. E.g. a manager who seeks to accomplish short term goals in order to collect a bonus but hurts the long term objectives and goals of the stockholders.

Agency costs of financial distress refers to the costs associated with conflicts of interest that may result in a company being insolvent, specially in the long run. This type of costs are not necessarily related to operating costs, instead they result from management decisions and strategies, e.g. higher cost of capital or debt, or even excessive spending.

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4 years ago
If McDonald's wanted to change its marketing strategy in response to the social trends outlined in the text, it might consider a
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Answer:

E) creating an advertising campaign to target elementary school children

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4 years ago
Below are six statements. indicate whether each on pertains micareconomics.
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Answer:

B), C) and F)

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Therefore in the given case, the microeconomics covered in B, C and F options

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3 years ago
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