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Harman [31]
3 years ago
8

An investor invests 70% of her wealth in a risky asset with an expected rate of return of 15% and a variance of 0.05 and she put

s 30% in a Treasury bill that pays 5%. Her portfolio's expected rate of return and standard deviation are __________ and __________ respectively.
Business
1 answer:
Mazyrski [523]3 years ago
6 0

Answer:

The portfolio's expected return is 12% and the standard deviation of the portfolio is 15.65%.

Explanation:

The expected rate of return of the portfolio is the weighted average of the individual stock returns that form up the portfolio. The formula for a two stock portfolio return is,

Portfolio return = wA * rA + wB * rB

Where,

  • w represents weight of the stocks in the portfolio
  • r represents the return of the stocks in the portfolio

Portfolio return = 0.7 * 0.15  +  0.3 * 0.05  =  0.12 or 12%

The portfolio which consists of a risky and a risk free asset has a standard deviation equal to the weight of the risky asset multiplied by its standard deviation. The risk free asset has no standard deviation. Thus, the formula for a portfolio standard deviation for such a portfolio is,

Standard deviation = weight of risky asset * standard deviation of risky asset

Standard deviation of portfolio = 0.7 * √0.05

Where standard deviation is the square root of variance.

Standard deviation of portfolio = 0.1565 or 15.65%

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Explanation:

3 0
3 years ago
Bob and Rob have started a food delivery business together called Grub Galore in their college town. They have not incorporated
Neko [114]

Answer:

Partnership Business

Explanation:

Partnership business is a business enterprise owned, managed and financed by a minimum of two individuals for the purpose of making profit.

Grub Galore is owned by Bob and Rob which makes it a partnership business.

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5 0
2 years ago
The following exchange demonstrates which problem solving technique?We pay higher costs than we need to when we go bowling becau
zlopas [31]
A.Fishbone Diagram because that's the answer
6 0
3 years ago
Read 2 more answers
Snowden Industries produces two electronic decoders, P and Q. Decoder P is more sophisticated and requires more programming and
Rainbow [258]

Answer:

Using Direct Labour hours;

The cost per unit for Decoder P=$5.76

The cost per unit for Decoder Q=$5.76

Using Activity based costing;

The cost per unit for Decoder P=$7.48

The cost per unit for Decoder Q=$5.01

Explanation:

A)Total Overhead cost= $275,000

Total Labour Hours=22,000

P Total Overhead  =6,600/22,000*$275,000=$82,500

Overhead cost per unit=$82,500+$31,680/19,800units=$5.76

Fixed cost=$105,600

19800/66000*$105,600=$31,680

Q Total overhead  =15,400/22,000*$275,000=$192,500

Overhead cost per unit=$192,500+$73,920/46,200units=$5.76

Fixed cost=$105,600

46,200/66000*$105,600=$73,920

B)Using activity based costing;

Total Overhead cost= $275,000

Repair and Maintenence Cost = $105,600

Total Labour Hours=22,000

P Overhead  =6,600/22,000*$275,000=$82,500

Overhead cost perunit=$82,500/19,800units=$4.16

P Activities overhead=(2000+190+1400)/5750*$105,600=$65,931.13

Activity cost per unit=$65,931.13/19,800units=$3.32

Total Overhead cost =$4.16+$3.32=$7.48

Q Total overhead  =15,400/22,000*$275,000=$192,500

Overhead cost per unit=$192,500/46,200units=$4.16

Q Activities overhead=(1000+60+1,100)/5750*$105,600=$39,668.87

Activity cost per unit=$39,668.87/46,200units=$0.85

Total Overhead cost =$4.16+$0.85=$5.01

4 0
3 years ago
Botosan Factory has budgeted factory overhead for the year at $453,120, and budgeted direct labor hours for the year are 384,000
Sloan [31]

Answer: $412,292

Explanation:

First compute Overhead Absorption Rate = Budgeted Overhead divided by Budgeted Activity Level

In this question the activity level is Direct Labour Hours (DLH) which is the basis for allocating overhead.

budgeted factory overhead for the year at $453,120, and budgeted direct labor hours for the year are 384,000.

$453,120 divided by 384,000 DLH =$1.18

Overheard to be allocated for May is OAR * Actual Activity level

$1.18*349400= $412,292

This is the amount to be allocated to may

7 0
3 years ago
Read 2 more answers
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