Answer:
the assets have a correlation coefficient equal to negative one.
Explanation:
Portfolio variance can be defined as the measurement of risk or dispersion of returns of a set of securities that makes up a portfolio fluctuate over a period of time.
Simply stated, portfolio variance is typically the total returns of the portfolio over a specific period of time.
In order to calculate the portfolio variance, the standard deviations of each security in the portfolio with their respective correlations security pair in the portfolio would be used. Portfolio variance is the square of standard deviation.
A two-asset portfolio with a standard deviation of zero can be formed when the assets have a correlation coefficient equal to negative one (-1) because this defines the efficiency frontier. In Economical portfolio theory, the efficient frontier is a group of optimal portfolios that offers an investor the highest expected return for a specific risk level or offers the lowest risk for a defined level of expected return.
Answer:
The answer is option (B), Market price=$991.47
Explanation:
The market price of a bond can be expressed as;
Market price=(Semi-annual coupon×((1-(1/1+r)^i)/r + face value/(1+r)^i
where;
i-maturity period, period=(2×6)=12
r-nominal yield to maturity rate=7.68/2=3.84%
Semi-annual coupon rate=7.5/2=3.75%
face value=$1,000
Semi-
annual coupon=(3.75/100)×1,000=$37.50
replacing;
Market price=Semi-annual coupon×((1-(1/1+r)^i)/r + face value/(1+r)^i
Market price=37.50×((1-(1/1+0.0384)^12)/0.0384 + 1,000/(1+0.0384)^12
Market price=(37.50×(1-0.64)/0.0384)+636.24
Market price=355.23+636.24
Market price=$991.47
Answer:
WACC 10.01825%
Explanation:
<u>before calculate WACC we need to calculate the equity and debt weights</u>
Debt 262,000
Value 548,000
Equity 548,000 - 262,000 = 286,000
Weight of Debt 262,000/548,000 = 0.52189781
Weight of Equity 286,000/548,000 = 0.47810219
<u>Now we can solve the WACC</u>
Ke = cost of equity = 0.126
Equity weight 0.52189781
Kd(1-t) = after-tax cost of debt = 0.072
Debt Weight 0.47810219
WACC 10.01825%
Answer:
8.13%
Explanation:
Annual return = [ (Total FV/Initial investment)^(1/n) ] -1
n = useful life of the project
Total Future Value = (22650*5) +5000
Total FV = $118,250
Initial investment = $80,000
Annual return = [ (118,250/80,000)^(1/5) ] -1
r = [ (1.478125^(1/5)] -1
r = 1.0813 - 1
r = 0.0813 or 8.13%
Trade barriers could be an answer to this question. Also, an embargo could be an acceptable answer. Let me know if you need more help, and give me a thanks if I helped!
