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julsineya [31]
4 years ago
15

Julie wants to create a $5,000 portfolio. She also wants to invest as much as possible in a high risk stock with the hope of ear

ning a high rate of return. However, she wants her portfolio to have no more risk than the overall market. Which one of the following portfolios is most apt to meet all of her objectives?
A) Invest the entire $5000 in stock with a beta of 1.0

B) Invest $2500 in stock with beta of 1.98 and $2500 in a stock with beta of 1.0

C) Invest $2500 in a risk free asset and $2500 in a stock with beta of 2.0

D) Invest $2500 in a stock with a beta of 1.0; $1250 in risk free asset, and $1250 in stock with beta of 2.0

E) Invest $2000 in a stock with beta of 3.0; $2000 in a risk free asset, and $1000 in a stock with a beta of 1.0
Business
1 answer:
svetoff [14.1K]4 years ago
3 0

Answer:

C) Invest $2500 in a risk free asset and $2500 in a stock with beta of 2.0

Explanation:

Stock that is beta 2 means that it is twice as volatile as the whole market. Meaning for example if the market is expected to move by 5% this stock will move 10%. New startup firms that are fast-growing usually have stocks in this category. It is more risky thank normal shares but no too much. We can invest $2,500 here.

We invest the remaining $2,500 in risk-free assets

This is a backup on the chance that the investment on beta 2 stocks do not perform, the risk-free assets will make up for losses.

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Lang Warehouses borrowed $178,960 from a bank and signed a note requiring 8 annual payments of $28,819 beginning one year from t
yan [13]

Answer: 6%

Explanation:

The annual payments can be considered to be annuity payments as they are constant. The amount borrowed can be considered the present value of the annuity.

Present value of annuity = Annuity * Present value interest factor of annuity, 8 years, %?

178,960 = 28,819 * Annuity factor

Annuity factor = 178,960 / 28,819

= 6.20979

To find out the interest rate, look at the Present Value of Annuity table and go to the 8 period column. Look for 6.20979. The interest rate that intersects with this factor is the interest rate implicit in this agreement.

That rate is 6%.

4 0
3 years ago
Ruff Wear expects sales of $560, $650, $670, and $610 for the months of May through August, respectively. The firm collects 20 p
Orlov [11]

Answer:

$643

Explanation:

Collection in the month of August is made up of

  • 20 percent of sales for August
  • 70 percent of sales for the month for July
  • 8 percent of sales for the month of June

Considering all the elements stated above,Collection in the month of August

= (20% × 610) + (70% × 670) + (8% × 650)

= 122 + 469 + 52

= $643

6 0
3 years ago
Suppose that the demand for milk in the United States is represented by the following equation, where P is the price of a gallon
Nostrana [21]

Answer:

a.

P = $3.50 per gallon

b.

Equilibrium Quantity = 165 million gallons

Explanation:

a.

The equilibrium price is the price at which Quantity demanded equals quantity supplied. To calculate the equilibrium price using the given equations for demand and supply, we need to equate both equations.

<u>Equilibrium Price (P) calculation</u>

QD = QS

200 - 10P  =  -10 + 50P

200 + 10  =  50P + 10P

210 = 60P

P = 210 / 60

P = $3.50 per gallon

b.

The equilibrium quantity can be calculated by inserting the value of Price (P) in any of the equation for demand or supply.

Equilibrium Quantity = 200 - 10(3.50)

Equilibrium Quantity = 200 - 35

Equilibrium Quantity = 165 million gallons

8 0
3 years ago
13. Which of the following is NOT used to describe the state of an economy?
Anni [7]

Answer:C.TINSTAAFL Rating

Explanation:

7 0
4 years ago
An agreement between Jim and his 18-year-old daughter, Betty, provides that he will give her $25,000 if she does not marry until
Mariulka [41]

Answer:

No, Jim is not correct.

Explanation:

Betty will win this case.

Generally, the law encourages marriage as its policy. If there is any contract that prevent or restrict marriage in whatever way, such contract would be considered null and void because it is against the public policy.

Despite the above, contracts will be generally considered valid when they place reasonable restrictions on marriage. In this question, the restriction placed on Betty that she should get married until after her 22nd birthday is reasonable and has to be considered to be valid. Based on this, Betty has to be paid the $25,000 as laid down in the binding contract between the two parties.

Therefore, Jim is not correct.

4 0
3 years ago
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