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kaheart [24]
3 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]3 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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Answer:D

Explanation:

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3 years ago
Miltmar Corporation will pay a year-end dividend of $5, and dividends thereafter are expected to grow at the constant rate of 4%
morpeh [17]

Answer:

a. 10.04%

b. $82.78

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

a. Expected rate of return or market capitalization = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

= 5% + 0.72 × (12% - 5%)

= 5% + 0.72 × 7%

= 5% + 5.04%

= 10.04%

The Market rate of return - Risk-free rate of return) is also known as the market risk premium and the same is applied.

b. Now the intrinsic value would be

= Expected dividend ÷ (Required rate of return - growth rate)  

= $5 ÷ (10.04% - 4%)

= $5 ÷ 6.04%

= $82.78

7 0
3 years ago
Purchases Journal The following purchase transactions occurred during March for Rehoboth, Inc.:
gtnhenbr [62]

Answer:

See the explanation section.

Explanation:

Mar. 4    Cleaning supplies debit = $77

Accounts payable - Health-Rite Supplies credit = $77

<em>To record the purchase of supplies.</em>

Mar. 19   Office equipment Debit = $3,750

Accounts payable - office Warehouse Credit = $3,750

<em>To record the purchase of office equipment on account.</em>

Mar. 23   Cleaning supplies Debit = $224

Accounts payable - Rubble Supplies Credit = $224

<em>To record the purchase of supplies.</em>

3 0
3 years ago
Which of the following statements is false?
Paul [167]

Answer:

C

Explanation:

C. online retailing and in-store retailing experience similar rates of product return.

3 0
3 years ago
5. Firms can measure the success of a new product, by asking three questions. Which of the following is NOT one of these questio
KatRina [158]

Answer:

The correct answer is the third option: Is the product already offered by competing firms?

Explanation:

To begin with, if the a company is looking forward to measure the success of a new product by asking three fundamental questions then the most important ones are those that implicates the satisfaction of the consumers and of the managers that work in the financial area due to the fact that they are the ones who make all the calculates and decide in what to invest, therefore that the success of the product will be achieved if it satisfies the technical requirements of the clients, if it is consider viable and valuable and if the sales were good enough to satify the producer's financial requirements.

6 0
3 years ago
Read 2 more answers
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