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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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On January 15, 2021, Bella Vista Company enters into a contract to build custom equipment for ABC Carpet Company. The contract s
ArbitrLikvidat [17]

Answer:

31 March 2021

Explanation:

The contract should be recorded on 31 March 2021 because according to the US Generally Accepted Accounting Principles, revenue should be recognize in the book only when service has been rendered to the customer, the selling price of product is fixed and confirmation of service arrangement and amount to be collected.

With regards to the above scenario, since the equipment was not delivered until 31 March, then 31 of March will be recognized.

3 0
4 years ago
Economists generally recognize that rent controls cause shortages in housing, yet rent controls tend to persist. Why does this o
Hunter-Best [27]

Answer:

D) All of the above are correct

Explanation:

Many people indeed do not know that price controls produce shortages, and we do not only refer to the general public, but also many politicians, who are ignorant of economic theory.

Property owners are politically unpopular because they are frequently perceived as being more priviliged and not paying their fair share. Populist politicans can use them as scapegoats to rile up support.

Many people benefit from rent controls, from owners colluding to the government, to real estate cartels, to tenants, or the government itself it it holds public housing.

3 0
3 years ago
Sierra owns a small business and handles many responsibilities, from logistics to marketing. She's seen a lot of success with Go
shutvik [7]

Answer:

A Smart Display campaign

Explanation:

A Smart Display campaign utilize Artificial Intelligence to automate and optimize the user's targeting and bidding process.

This campaign will target the internet users based on their past activities and presented your ads to the people with the highest likelihood of conversion.

By running this campaign, Sierra does not have to manually target where she should show her advertisement. The program will automatically select it while Serra can focus her time doing other tasks.

3 0
3 years ago
A share of stock with a beta of 0. 75 currently sells for $50. Investors expect the stock to pay a year-end dividend of $2. The
Rama09 [41]

Expected price next year = $62.58

Beta is 0.75, PO is $50, D1 is $2, RF is 11%, and RM is 4%.

Where,

Expected Dividend = D

Po = Price as of today.

Risk-free Rate is Rf.

Market risk premium is Rm.

g = rate of growth

Equity cost is Rf plus beta minus Rm.

Equity cost is 11% plus 0.75 and 4%.

Equity cost = 3.33%

Making use of the Dividend Discount Model to Estimate Growth Rate

(D1/P0) + g = ke

(2/50) + g = 3.33%

0.04 + g= 3.33%

g = 3%

Expected price for the following year = $2*1.033/ (0.03-0.033)

Expected price next year = $62.58

What is Expected price?

As its name suggests, predicted price level is a forecast that takes into account accurate evaluation of pertinent economic data to foretell what will happen with those goods and services in the future. Making changes to this level when new information becomes available is essential because unknowable factors may become real over time.

To learn more about Expected price visit:brainly.com/question/19169084

#SPJ4

3 0
2 years ago
Hazel Morrison, a mutual fund manager, has a $40 million portfolio with a beta of 1.00. The risk-free rate is 4.25%, and the mar
labwork [276]

Answer:

The average beta of the new stocks would be 1.75 to achieve the target required rate of return

Explanation:

In order to calculate the average beta of the new stocks to achieve the target required rate of return we would have to calculate the following:

average beta of the new stocks = (Required Beta-(portfolio /total fund) *old beta)/(additional portfolio/total fund)

To calculate the Required Beta we would have to use the formula of Required rate of return as follows:

Required rate of return=Risk free return + (market risk premium)*beta

0.13=0.0425+(0.06*Required Beta)

Required Beta = (0.13-0.0425)/0.06

Required Beta = 1.45

Therefore, average beta of the new stocks =(1.45-($40/$100) *1)/($60/$100)

average beta of the new stocks =1.05/0.6

average beta of the new stocks =1.75

The average beta of the new stocks would be 1.75 to achieve the target required rate of return

7 0
4 years ago
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