Answer:
The new portfolio beta is 1.31 rounded off to two decimal places.
Explanation:
The portfolio beta is a function of the sum of the weighted average betas of the individual stock's that form up the portfolio. The portfolio beta is calculated using the following formula,
Portfolio beta = wA * Beta of A + wB * Beta of B + ... + wN * Beta of N
Where,
- w is the weightage of each stock in the portfolio
The beta of the portfolio when one stock with a beta of 1 is sold is,
The sum of individual stock betas for 19 stocks is = 20 * 1.31 - 1 * 1 = 25.2
The new portfolio beta when one stock with a beta of 0.97 is added is,
Portfolio beta = (25.2 + 0.97) / 20
Portfolio beta = 1.3085 rounded off to 1.31
Answer:
Dr Bonds payable 1,600,000
Dr Loss on redemption of bonds 36,800
Cr Cash 1,632,000
Cr Discount on bonds payable 4,800
Explanation:
Loss/gain on redemption of bonds = carrying value - cash paid = ($1,600,000 - $4,800) - $1,632,000 = $1,595,200 - $1,632,000 = -$36,800 loss
Answer:
It must shut down
Explanation:
Even at the lower average variable cost, which is 3.50 dolllar will be lossing money given a market price of 3.00 dollar
Considering is not making enough to cover the variable cost the best option is to shut down and only take a hit for the fixed cost until it can totally exit the market. If it tries to produce it will only make thinks worse as producing generates more losses
<span>Small businesses are hesitant to involve in global business because it involves various trade laws or tariffs. Taking that kind of plunge in the business world for a business of small scale is risky situation or at least the small business owners feel. Sometimes this would be the turning point for these businesses to break out huge.</span>
Answer:
4. how much debt should be assumed to fund a project.
Explanation:
The capital structure is a mix of the debt and equity
In equation form, it is
Capital structure = Debt + equity
These two items should be taken for financing the assets of the company
And, the other options that are mentioned are related to the techniques of the capital budgeting
Therefore, the correct option is 4.
