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Nostrana [21]
2 years ago
14

You manage an equity fund with an expected risk premium of 10% and a standard deviation of 14%. The rate on T-bills is 6%. Your

client chooses to invest $60,000 of her portfolio in your equity fund and $40,000 in T-bills. What is the expected return of your client's portfolio? what is the Sharpe ratio for the equity fund?
Business
1 answer:
allsm [11]2 years ago
6 0

Answer:

The expected return is 12% and the Sharpe ratio is 8.4%

Explanation:

In order to calculate the expected return, we have to calculate first the Return on equity fund as follows:

Return on equity fund = risk free rate(= rate on T bill)  + risk premium = 6% + 10% = 16%

Return on T bill money market fund = 6%

Therefore, expected return on portfolio = weight of equity fund x return on equity fund + weight of money market fund x return on money market fund

Expected return on portfolio = (60000/(60000 +40000))*16% + (40000/(60000+40000))*6%

Expected return on portfolio = 60*16% + 40%*6% = 9.6% +2.4% = 12%

In order to calculate the Standard deviation of portfolio we have to use the following formula:

Standard deviation of portfolio = weight of equity fund x standard deviation of equity fund

Standard deviation of portfolio = (60000/(60000+40000))*14%

= 60%*14% = 8.4%

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When an employee comes late to the office, an internal attribution will occur if there is low _____, low ______ and high _____.
coldgirl [10]

Answer:

B. consensus; distinctiveness; consistency.

Explanation:

Internal attribution: It is the case of human behavior that causes the attribution, such as ability, skills, personality, etc. it is also known as dispositional attribution. In this case, individual does not blame external factor or attribution, instead, they use an internal cause for their behavior.

In the given case, the employee comes late to the office, he will use internal attribution for his behavior if there is low consensus, low distinctiveness of other factors  and high consistency of getting late.

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2 years ago
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4 0
2 years ago
In 1999, the Federal Trade Commission allowed Exxon and Mobil to merge. At the time, Exxon and Mobil were the top two firms in t
Dahasolnce [82]

Answer:

1999 Merger of Exxon and Mobil

The reason that made the U.S. government to require Exxon and Mobil to divest themselves of so many gas stations in localized parts of the country to be willing to allow the merger to occur is:

c. To ensure competition in these regions and protect consumers from unwarranted price increases.

Explanation:

The agreement to sell so many gas stations in localized parts of the country was to forestall antitrust lawsuits.  It was also made to protect consumers from unwarranted price increases, allowing more competition in the affected areas, where ExxonMobil owed too many gas stations.

7 0
2 years ago
Olive Branch Inc. had 400,000 shares of common stock issued and outstanding at December 31, 2016. On July 1, 2017 an additional
klasskru [66]

Answer:

$512,000

Explanation:

The computation of Number of Share included for computing diluted earning per share is shown below:-

For computing the Number of Share included for computing diluted earning per share we need to find out the issued shares and Stock option which is given below

Issued Shares = 200,000 × 6 ÷ 12 (From July to December)

= $100,000

Stock option = 60,000 - (60,000 × $28 ÷ $35)

= $12,000

So, Total stock outstanding = Shares at Beginning + Issued Shares + Stock option

= 400,000 + $100,000 + $12,000

= $512,000

3 0
2 years ago
Jones Manufacturing sent Blue Company an invoice for equipment with a list price of $10,000. The invoice is dated July 27 with t
beks73 [17]

Answer:

Amount to be paid = $6,000

Explanation:

Trade discount is the reduction in the list price granted to a buyer. A 40% trade discount implies that Blue would have to pay only 60% of the list price.

The amount due for settlement = 10,000 - (40%× 10,000)= $6,000.

The  term 2/10 implies that Jones is entitled to a cash a discount of 2% if it settles its invoice within 10 days following the invoice date. The deadline settlement date to receive the discount would therefore be August 6.

Since the account was settled on September 8 which is later than the deadline date set to qualify for the cash settlement discount, Blue would have to pay $6,000.

Amount to be paid = $6,000

5 0
3 years ago
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