Answer:
The total opportunity cost of investing in the business is explained below:
Explanation:
Opportunity cost is also known as alternative cost, the cost incurred from giving up one benefit for an alternative. Kelly withdrew 1000$ from his account, which was giving him a 3% profit annually, and the total opportunity cost of withdrawing 1000$ is 30$ annually. Similarly, he withdrew another 2000$ at 7% interest rate that is 140$which he has to pay annually.
30$ + 140$ =170$
The total annual opportunity cost is 170$
Answer:
a. What is the average annual return?
average annual return (mean) = (-4.5% + 28.1% + 12.2% + 3.7%) / 4 = 9.875%
b. What is the variance of the stock's returns?
variance = [(-4.5% - 9.875%)² + (28.1% - 9.875%)² + (12.2% - 9.875%)²) + (3.7% - 9.875%)²] / 4 = (206.64 + 332.15 + 5.41 + 38.13) / 4 = 582.33 / 4 = 145.5825
c. What is the standard deviation of the stock's returns?
standard deviation = √145.5825 = 12.06%
When it comes to the deformation of rocks, it is believed that water weaken the chemical bonds that constituent mineral grains. Water forms a film around the mineral and weaken the bonds. This is why wet rocks tend to act in a more ductile manner. If a rock is dry, they tend to be more brittle.
Answer:
Option A is riskier
Explanation:
In this question, we want to know which of the two stocks is riskier.
To answer this, we can use the standard deviation of returns as a risk measure.
For a security with a big value for standard deviation of returns, its per period returns are wider making its range per day large.
Hence, what this means is that out of the two stocks, the one with a larger value of standard deviation of returns will guarantee more risk as it is expected to give a better ranges of price
Now back to the values in the question, we can see that the standard deviation of returns of stock A is greater than that of stock B which this makes it a more risky option
