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blagie [28]
3 years ago
6

the​ risk-free rate is 3​% and you believe that the​ S&P 500's excess return will be 10​% over the next year. If you invest

in a stock with a beta of 1.2 ​(and a standard deviation of 30​%), what is your best guess as to its expected excess return over the next​ year?
Business
1 answer:
horrorfan [7]3 years ago
7 0

Answer:

The expected excess return will be 11.4%

Explanation:

The S&P 500's excess return is the market return (rM). Using the CAPM model or the SML approach, we can calculate the required/expected rate of return on the stock we are investing in.

The expected rate of return is,

r = rRF + β * (rM - rRF)

Thus, return on the invested stock will be:

r = 0.03 + 1.2 * (0.1 - 0.03)

r = 0.114 or 11.4%

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Azule Co. manufactures in two sequential processes, cutting and binding. The two departments report the information below for a
lys-0071 [83]

Answer:

Cutting $8,305

Binding $365

Explanation:

Calculation to Determine the ending balances in the Work in Process Inventory accounts of each department.

Cutting Ending work in process =$ 1,145+ 3,750+$ 9,240+$14,700-$20,530

Cutting Ending work in process =$8,305

Therefore the ending balances in the Work in Process Inventory accounts for cutting department will be $8,305

Binding Ending work in process= $2,200+$2,646+$3,450+$7,100+$18,575+$20,530-$49,000

Binding Ending work in process= $365

Therefore Therefore the ending balances in the Work in Process Inventory accounts for binding department will be $365

5 0
3 years ago
Choose the best and worst answer to the following question:
oee [108]

Answer:

Choose the best and worst answer to the following question:

Suppose your supervisor returns from vacation and notices that the work area looks terrible. You also had the last two days off. He's angry and criticizes you for being careless and sloppy. This wasn't your fault.

What would you do?

Best answer: Let the coworkers responsible know that you had to take the heat.

worst answer: Tell him it wasn't your fault and not to criticize you unjustly.

Explanation:

7 0
3 years ago
During January, LexPro Co., which maintains a perpetual inventory system, recorded the following information pertaining to its i
diamong [38]

Answer:

$3,225

Explanation:

The computation of the amount reported as an ending inventory is shown below:

Date Particulars Units   Cost Amount                

1 -1        Op Balance     1,000         $1            $1,000  

1 -7         Purchases      600          $3             $1,800

Total                              1,600    $1.75         $2,800  

                                              ($2,800 ÷ 1,600 units)  

1 -20 COGS           900      $1.75            $1,575

Total                              700     $1.75            $1,225

1 -25       Purchases     400     $5                 $2,000

Ending inventory         1,100    $2.9318       $3,225

                                                  ($3,225 ÷ 1,100 units)  

We simply added the purchase units with the opening balance and deduct the cost of goods sold units from the opening balance so that the correct ending inventory amount could arrive

3 0
3 years ago
During the first month of operations ended July 31, Western Creations Company produced 80,000 designer cowboy hats, of which 72,
bulgar [2K]

Answer:

Western Creations Company

1. Income Statements for July and August, under absorption costing:

                                               July                   August

Sales Revenue                $4,320,000.00    $4,320,000.00

Cost of goods sold            3,240,000.00      2,649,600.00

Gross profit                      $1,080,000.00     $1,670,400.00

Total selling & admin. exp. $169,000.00       $169,000.00

Net Income                          $911,000.00     $1,501,400.00

2. Income Statements for July and August, using variable costing:

                                                   July                   August

Sales Revenue                    $4,320,000.00    $4,320,000.00

Variable cost of goods sold  3,081,600.00       2,491,200.00

Contribution margin            $1,238,400.00     $1,828,800.00

Fixed expenses:

Total fixed costs                      345,000.00         345,000.00

Net income                           $893,400.00      $1,483,800.00

3a. The reason for the differences in the amount of the income from operations in in (1) and (2) for July is the cost of goods sold based on full manufacturing costs for (1) while only variable costs are considered for (2).

3b. The reason for the differences in the amount of the income from operations in (1) and (2) for August is also the cost of goods sold based on full manufacturing costs for (1) while only variable costs are considered for (2).

Explanation:

a) Data and Calculations:

Number of hats produced = 80,000

Number of hats sold = 72,000

Ending inventory = 8,000

1 Sales $4,320,000.00

2 Manufacturing costs:             July                    August

3 Direct materials                  $1,600,000.00    $1,280,000.00

4 Direct labor                           1,440,000.00       1,152,000.00

5 Variable manufacturing cost 240,000.00         192,000.00

6 Fixed manufacturing cost      320,000.00        320,000.00

Total manufacturing costs   $3,600,000.00  $2,944,000.00

Under absorption costing:

Unit cost = $45 ($3,600,000/80,000)             $36.80 ($2,944,000/80,000)

Cost of goods sold = $3,240,000 ($45*72,000) $2,649,600 (36.8*72,000)

Ending Inventory =         360,000 ($45*8,000)         294,400 ($36.8*8,000)

7 Selling and administrative expenses:

8 Variable                                 $144,000.00       $144,000.00

9 Fixed                                         25,000.00          25,000.00

Total selling & admin.  exp.     $169,000.00      $169,000.00

Under variable costing:

2 Manufacturing costs:

3 Direct materials                    $1,600,000.00     $1,280,000.00

4 Direct labor                             1,440,000.00        1,152,000.00

5 Variable manufacturing cost   240,000.00          192,000.00

8 Variable selling & admin cost   144,000.00          144,000.00

Total variable costs =             $3,424,000.00    $2,768,000.00

Unit variable cost = $42.80 ($3,424,000/80,000)     $34.60

Cost of goods sold = $3,081,600 ($42.80 * 72,000)  $2,491,200

Ending Inventory =         342,400 ($42.80 * 8,000)         276,800

6 Fixed manufacturing cost    $320,000.00            $320,000.00

9 Fixed selling & admin. cost      25,000.00                25,000.00

Total fixed costs =                   $345,000.00            $345,000.00

7 0
3 years ago
Authority to conduct open market operations, which consists of buying and selling of , rests with the Committee. Reserves equal
katovenus [111]

Answer:

If the Fed conducts an open market purchase by specifically buying government securities from the Bank, banks' reserves increase and the quantity of money increases.

Explanation:

The Federal Reserve (Fed) buys and sells government securities to control the money supply. This activity is called open market operations (OPO). By buying and selling government securities in the free market, the Fed can expand or contract the amount of money in the banking system and pursue its monetary policy.

To increase the money supply, the Fed will purchase bonds from banks to inject money into the banking system.

The Federal Reserve's latest effort to calm the financial system — pumping $100 billion a day into trillion-dollar funding markets — is intended to be a temporary role, born of necessity. But it may turn out to be a significant expansion of the Fed's footprint.

3 0
3 years ago
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