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dexar [7]
3 years ago
15

Consider the following information: Portfolio Expected Return Beta Risk-free 6 % 0 Market 10.2 1.0 A 8.2 1.4 a. Calculate the re

turn predicted by CAPM for a portfolio with a beta of 1.4. (Round your answer to 2 decimal places.) b. What is the alpha of portfolio A. (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.)
Business
1 answer:
denpristay [2]3 years ago
6 0

Answer:

a. 11.88%

b. -3.68%

Explanation:

Given that

Risk free rate = 6%

Beta = 1.4%

Market rate = 10.2%

Risk free rate = 6%

Alpha return = 8.2%

a. The computation of expected return of portfolio is given below:-

= Risk free rate + Beta (Market rate - Risk free rate)

= 6% + 1.4% (10.2% - 6%)

= 11.88%

b. The calculation of Alpha of portfolio is shown below:-

= Alpha return - Expected return

= 8.2% - 11.88%

= -3.68%

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Harry recently raised his employees' wages, which has increased production costs. Which factor did the salary hike affect?
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The factor that the salary hike effect is :
A. Fixed cost
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hope this helps
6 0
3 years ago
Read 2 more answers
Dunstreet's department store would like to develop an inventory ordering policy of a 95 percent probability of not stocking out.
ArbitrLikvidat [17]

Answer:

219 sheets

Explanation:

D = 5000 per year,

d = daily demand = 5000/365 = 13.70 sheets

T = time between orders (review) = 14 days

L = Lead time = 10 days

σd= Standard deviation of daily demand = 5 per day

I = Current Inventory = 150 sheets Service Level

P = 95% (Probability of not stocking out) q=d(L+D)z σ T+L-1

σ T+L-1= square root (T+L)=5 square root 14+10= 24.495

From Standard normal distribution, z = 1.64 for 95% Service Level (or 5% Stock out)

q=13.70*(14+10)+1.64(24.495)-150

= 218.97 →219 sheets

5 0
3 years ago
Read 2 more answers
Big Dom’s Pawn Shop charges an interest rate of 27.5 percent per month on loans to its customers. Like all lenders, Big Dom must
lidiya [134]

Answer:

APR is 330% and EAR is 1745.53%

Explanation:

Given:

Monthly interest rate = 27.5%

APR or annual percentage rate = 27.5×12 = 330%

So, Big Dom should report an APR of 330% to customers.

EAR or effective annual rate = (1+\frac{APR}{m}) ^{m}-1

Here,

APR is 330% and m is 12

330÷12 = 27.5%

substituting the value in the above formula:

EAR = 1.275^{12}-1

        = 17.4553 or 1745.53%

3 0
3 years ago
If the absolute price of good X is $10 and the absolute price of good Y is $14, then what is (a) the relative price of good X in
Yuri [45]

Answer:

 1X= 5/7Y

1Y= 7/5Y

Explanation:

Relative price of product of X in terms of product Y is the price of product X expressed a fraction of product of Y, that is $10/$14=5/7,and it is expressed in standard terms 1X=5/7Y

The relative price of  product Y in terms of product X is $14/$10=7/5 and also can be expressed in standard format as IY=7/5Y

All in all, product the relative price of product Y seems to be higher than the relative price of product x

8 0
3 years ago
Describe the difference between real gdp and nominal gdp.​
Hatshy [7]

Answer: Real GDP takes into consideration adjustments for changes in inflation. ... The main difference between nominal GDP and real GDP is the adjustment for inflation

Explanation:

3 0
3 years ago
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