1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
ale4655 [162]
3 years ago
9

Consider the following information on three stocks: State of Economy Probability of State of Economy Rate of Return if State Occ

urs Stock A Stock B Stock C Boom .25 .27 .15 .11 Normal .65 .14 .11 .09 Bust .10 −.19 −.04 .05 A portfolio is invested 45 percent each in Stock A and Stock B and 10 percent in Stock C. What is the expected risk premium on the portfolio if the expected T-bill rate is 4.1 percent?
Business
1 answer:
PolarNik [594]3 years ago
5 0

Answer:

market premium = 0,0781 = 7.81%

Explanation:

We have to calculate the market return and then calcualte the premium as the difference between the expected return on the market and the risk-free rate:

We multiply each outcome by the stock weight. and then for the probability of occurence of that state of economy

Calculations for boom:

Change of boom x (weighted outcome A + weighted outcome B + weighted outcome C)

0.25    x    (0.45 x 0.15 + 0.45 0.27 + 0.1 x 0.05) = 0.05

\left[\begin{array}{cccccc}Stock&&B&A&C&Totals\\Weights&&0,45&0,45&0,1&&Boom&0,25&0,15&0,27&0,11&0,05&Normal&0,65&0,11&0,14&0,09&0,078975&bust&0,1&-0,04&-0,19&0,05&-0,00985&&&&&return&0,119125&\end{array}\right]

market expected return 0,1191

Market premium: 0,1191 - 0,041 = 0,0781

You might be interested in
What information in a drawings title block identifies the project?
Oksi-84 [34.3K]

Answer:

/hhvkkkkkkkkkkkkkkkk

Explanation:

8 0
4 years ago
Question 14 of 20
serg [7]

Answer:

OD. A person who goes to earn a college degree will have to pay the full costs of going to college

4 0
2 years ago
Suppose two companies attempt to merge, and they operate in an industry where the postmerger Herfindahl-Hirschman index is 2,900
Allushta [10]

Answer:

Option B -  There are significant diseconomies of scope is the correct answer.

Explanation:

Option  A is, not a condition that could improve the probability that the justice department would approve the merger.

The Herfindahl-Hirschman index is based on a restricted definition of the product market or the impact of foreign competition, the merger might be allowed.

It might also be permitted if one of the firms is in financial trouble, or if significant economies of scale exist in the industry.

Significant diseconomies of scope would only serve to make the merger less likely to be accepted.

Therefore, option B is the correct answer.

6 0
3 years ago
Read 2 more answers
The ________, published by the Department of Labor, lists more than 20,000 job titles and descriptions and serves as a useful to
matrenka [14]

Answer:

Dictionary of Occupational Titles

Explanation:

The answer is the Dictionary of Occupational Titles because this is a document created by the United States Department of Labor in which it establishes a big amount of different jobs in many areas and what they involve to help employers and the government to be able to define them in their organizations.

6 0
3 years ago
The term that is used to refer to a situation in which one party to an economic transaction has less information than the other
Dmitry_Shevchenko [17]

Answer: The correct answer is choice c.

Explanation: Asymmetric information is the term that is used to refer to a situation in which on part to an economic transaction has less information than the other party. This term is also known as information failure.

3 0
3 years ago
Other questions:
  • Which of the following are possible outcomes of rapid population growth?
    10·2 answers
  • Dvr technology allows advertisers to get more specific information about what viewers watch
    6·1 answer
  • ​The monthly salaries of a sample of 100 employees were rounded to the nearest $10. They ranged from a low of $1,040 to a high o
    12·1 answer
  • Q6. Explain why most experts believe that official U.S. data underestimate the actual rate of unemployment. What factors could m
    5·1 answer
  • Regression analysis models helped Avon realize that employee benefits and the appointment fee that representatives pay for mater
    11·1 answer
  • Auto insurance is needed primarily because of __________. (points : 2)
    11·1 answer
  • Quentin operates an ice cream franchise which has shops throughout the United States. CoolCream Co., the franchisor, supplies th
    15·1 answer
  • Your company has been running several small applications in Oracle Cloud Infrastructure and is planning a proof-of-concept (POC)
    10·1 answer
  • Genrapay Inc., a multinational firm, has a branch of operations in a country. Due to rampant militant nationalism, the governmen
    14·1 answer
  • Farrah, a regional manager for an hvac equipment retailer, received an e-mail from the ceo outlining the new goal of decreasing
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!