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kaheart [24]
2 years ago
14

You invest $1,000 in a complete portfolio. The complete portfolio is composed of a risky asset with an expected rate of return o

f 16% and a standard deviation of 20% and a Treasury bill with a rate of return of 6%. The slope of the capital allocation line formed with the risky asset and the risk-free asset is approximately ________.
Business
1 answer:
vladimir1956 [14]2 years ago
3 0

Answer:

50%, or 0.5

Explanation:

The slope of the capital allocation line (CAL) can be calculated using the following formula:

Slope of CAL = (Return of risky asset - Return of Risk-less asset) ÷ Standard deviation of the risky asset

Therefore, we have:

Slop of CAL = (16% - 6%) ÷ 20% = 50%, or 0.5

Therefore, slope of the capital allocation line formed with the risky asset and the risk-free asset is approximately 50%, or 0.5.

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Opportunity cost is __
Mariulka [41]

Answer: A.

Explanation:

By definition, opportunity cost is the amount or value of something you gave up for another good.

For example: say you value sleeping in at $5 value going to class at $4. You decide to get up and go to class, the $4 value. Therefore, your opportunity cost is what you gave up (sleeping in) for another good/choice (going to class), is $5 since you valued sleeping in at that.

6 0
3 years ago
An investor must decide between putting $2,000 into a regular retirement plan or putting $1,440 into a Roth retirement plan. If
Novosadov [1.4K]

Answer:

They both produced the same cash amount

Explanation:

The regular retirement would have its deducted after withdrawal from the plan while Roth retirement plan's tax would have been deducted prior to investing funds in the plan

The future value of the $2000 is computed thus:

FV=PV*(1+r)^n

PV is the amount saved in the plan which is $2000

r is the growth rate of the funds in the plan which is 12%

n is the number of years the amount would be left in the plan

FV=$2000*(1+12%)^20=$ 19,292.59  

After tax amount=$ 19,292.59*(1-28%)=$ 13,890.66  

The future value of the $1,440 is computed thus:

FV=$1,440*(1+12%)^20=$ 13,890.66  

The Roth plan has not tax implication thereafter as tax was paid before savings.

7 0
3 years ago
Suppose that the price of wheat is above its equilibrium price. You would expect to see __________- A) an increase in quantity d
disa [49]

Answer:

The correct answer is letter "B": a leftward shift of the demand curve because of the high price.

Explanation:

The equilibrium price represents the point at which buyers' demand and sellers supply face each other because both parties' needs are satisfied. If the price of a given product is higher than the equilibrium level, the quantity demanded is likely to decrease which directly implies a leftward move in the demand curve.

8 0
2 years ago
Aaron is considering an investment that will pay $7,500 a year for five years, starting one year from today. This is an example
Olegator [25]

Answer:

This is an example of a

b. an ordinary annuity.

Explanation:

Aaron's cash inflows of $7,500, which he receives at the end of the year, is an ordinary annuity because it comprises a series of equal payments receipts received over a fixed length of time, and it occurs at the end of the year.  If Aaron receives the series of payments at the beginning of each period and not at the end, it will be described as an annuity due.  If Aaron receives the series of payment indefinitely, it is called a perpetuity.

7 0
3 years ago
The short-run economic outcome resulting from the increase in production costs is known asstagflation . Now suppose that the gov
masha68 [24]

Answer: Increase

Explanation: When government pursues accommodative policy as implied in the question, it would lead to a surge or increase in price level this is as a result of lower interest rates which tends to increase money supply thereby leading to a higher economic growth. Higher growth automatically translates to a higher employment, Which would likely lead to a higher inflation rate.

3 0
2 years ago
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