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shusha [124]
2 years ago
8

An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 21% and a standard devi

ation of return of 39%. Stock B has an expected return of 14% and a standard deviation of return of 20%. The correlation coefficient between the returns of A and B is .4. The risk-free rate of return is 5%.
The proportion of the optimal risky portfolio that should be invested in stock B is approximately ________.

A) 29% B) 44% C) 56% D) 71%
Business
1 answer:
irakobra [83]2 years ago
3 0

Answer:

A) 29%

Explanation:

W= (.14-.05)(.39^2)-(.21-.05)(.20)(.39)(.4)

(.14-.05)(.39^2)+(.21-.05)(.20^2) - (.14-.05+.21-.05)(.20)(.39)(.4)

B = 71% A =1-0.71= 29%

σ2rp = (.292)(.392) + (.712)(.202) + 2(.29)(.71)(.39)(.20).4

σ2rp = .045804

σrp = 21.4%

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The Fun Tyme Toy Company discovers that one of its products can easily break, exposing children to potential injury from the sha
Novosadov [1.4K]

Answer:

A) 24 hours

Explanation:

The Consumer Product Safety Act (CPSA) established the Consumer Product Safety Commission (CPSC) which is the government entity in charge of setting product safety standards, requesting recalls and banning products if necessary.

In this case, if a toy is potentially dangerous then the company must notify the CPSC within one business day and start the recall procedure immediately.

4 0
3 years ago
If Dirk’s Doughnuts is a perfectly competitive firm and is currently incurring economic losses of $500: a. firms will enter the
GenaCL600 [577]

Answer:

The correct answer is option e.

Explanation:

In a perfectly competitive market, there are no limitations on the entry and exit of firms. If the existing firms have positive economic profits, this attracts other potential firms to join the market. In case of losses the firms incurring losses exit the market.  

If Dirk’s Doughnuts is operating in a perfectly competitive market and is incurring economic losses, firms having losses will exit the market.  

This will cause the market supply to decrease. As the supply curve shifts to the left, the price of the product will increase. This will cause profits to increase. The firms will operate at zero economic profits.  

4 0
3 years ago
Eric works at an electronics store in a mall. Eric doesn't like to work hard, and it costs him $100 to do so. Eric's employer ca
SCORPION-xisa [38]

Answer: work hard; $65; less; $85

Explanation:

The following can be deduced from the question:

The Expected profit from working hard will be:

= (90% × $200) + (10% × $50)

= (0.9 × $200) + (0.1 × $50)

= $180 + $5

= $185

Then, the profit will be the difference between revenue and coat which will be:

= $185 - $100

= $85

Then, the expected profit from shirking will be:

= (90% × $50) + (10% × $200)

= (0.90 × $50) + (0.10 × $200)

= $45 + $20

= $65

Then, the profit will be:

= $65 - $0

= $65

Eric will (work hard) because the net gain of ($65) from shirking is (less) than the net gain of ($85) from working hard.

7 0
2 years ago
On January 15, Cheyenne Corp. sells merchandise on account to Flounder Associates for $4500 with terms 2/10, n/30. On January 20
Leni [432]

Answer:

The amount of cash received on January 24 is $3332

Explanation:

The amount of cash received will be for the net amount of receivable after adjusting for sales returns and the sales discount as the payment is received within the discount period of 10 days as stated by the term 2/10 which means a 2% discount if payment is received within 10 days of sale.

The accounts receivable at January 15 after sale were $4500. Out of this amount, $1100 of returns are made. Thus, the remaining balance of accounts receivables after return is $4500 - $1100 = $3400

The discount received will be = 3400 * 2% =  $68

Thus, the cash received on January 24 will be 3400 - 68  =  $3332

6 0
3 years ago
All of Ameliorate Inc.'s sales are on account. 60% of the credit sales are collected in the month of sale, 30% in the month foll
Sidana [21]

Answer:

Total cash collection= $530,000

Explanation:

Giving the following information:

<u>Sales:</u>

February $500,000

March $400,000

April $600,000

60% of the credit sales are collected in the month of sale, 30% in the month following sale, and 10% in the second month following the sale.

<u>Cash collection April:</u>

Cash collection credit sales from April= (600,000*0.6)= 360,000

Cash collection credit sales from March= (400,000*0.3)= 120,000

Cash collection credit sales from February= (500,000*0.1)= 50,000

Total cash collection= $530,000

6 0
2 years ago
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