All categories

3 years ago

Stock A has the following returns for various states of the economy:

Business

1 answer:

Nadusha1986 [10]3 years ago

6 0

Answer:

The correct answer is b.12.7%

Explanation:

Expected return: It is used to calculate the expected value of the formula

In this question, the formula should be used which is shown below:

Expected return = Return of portfolio × Probability of portfolio

So,

For Recession, the expected return would be equal to

= -72 × 9% = -6.48%

For below average, the expected return would be equal to

= -15 × 16% = -2.4%

For average, the expected return would be equal to

= 16 × 51% = 8.16%

For above average, the expected return would be equal to

= 35 × 14% = 4.9%

For boom, the expected return would be equal to

= 85 × 10% = 8.5%

Now, do the sum of all states of the economy, so that the solution can arrive.

So, the answer would be

= -6.48% + (-2.4%) +8.16% +4.9% + 8.5%

= 12.68% round off = 12.7%

Thus, the Stock A's expected return is 12.7%

And, the correct answer is b.12.7%

You might be interested in

Write a team consensus response of 525 to 700 words to include the following: • Provide detailed rational of why goodwill must b

grin007 [14]

1)Provide detailed rational of why goodwill must be adjusted for impairment

U.S. generally accepted accounting principles (GAAP) require companies to review their goodwill for impairment on an annually basis at a reporting unit level. Events that are considered as the main causes of goodwill impairment include deterioration in economic conditions, increased competition, loss of key personnel, and regulatory action

Explanation:

1)Provide detailed rational of why goodwill must be adjusted for impairment

2) List the tests for impairment. 

Impairment test is an accounting procedure carried out to find out if an asset is impaired( i.e. whether the economic benefits that the asset embodies have dropped drastically.)

As per US GAAP, if the carrying value of an asset exceeds the sum of undiscounted expected cash flows of an asset, the asset is impaired

3)Explain the meaning of a non cash impairment charge

A non-cash charge is a accounting expense that does not involve a cash payment.

(Depreciation, amortization, depletion, stock-based compensation, and asset impairments are common non-cash charges that reduce earnings but not cash flows)

5 0

4 years ago

Do you think chefs give much thought to the nutritional value of the dishes they create? Explain

padilas [110]

No. Its whats cheap, which is usually artificial ingredients with no nutritional value

4 0

3 years ago

Read 2 more answers

Employees who are travelling can connect securely to their office network through the internet when a ________ has been establis

lyudmila [28]

The asnwer for this question is: VPN
VPN stands for Virtual private network, which is a form of encrypted network that creates a safe connection to access a certain network.
IT will be a lot harder for hackers to get into VPN connection because VPN could block the data intrusion from the address that is not authorized by the owner.

4 0

3 years ago

On July 1, 1992, York Co. purchased as a held-to-maturity investment $1,000,000 of Park, Inc.'s 8% bonds for $946,000, including

professor190 [17]

Answer:

Park Bonds 1,000,000

Discount on bonds (79,400)

Interest receivable 80,000

Carrying value 1,000,600

Explanation:

Investment on Park Bonds 1,000,000

interest receivable 40,000

cash 946,000

discount on Park bonds 94,000

Carring value at December 31th 1992

946,000 x 10% = 94,600 interest revenue

Cash proceeds 1,000,000 x 0.08 = 80,000 interest receivable

Discount on Bonds 14,600

94,000 - 14,600 = 79,400

94,600 interest revenue

(40,000) accrued interest

54,600 gains for the period

Park Bonds 1,000,000

Discount on bonds (79,400)

Interest receivable 80,000

Carrying value 1,000,600

5 0

3 years ago

SpeakEasy, a U.S. software company that specializes in voice-recognition software, wishes to rapidly enter the growing technical

bulgar [2K]

Answer:

<h2>In this case, the answer would be acquiring or merging with other firms producing related products or services.</h2>

Explanation:

As mentioned in the question, the market for technical translation software is basically dominated by firms producing differentiated or specialized products and services.
Now, considering that SpeakEasy is a completely new entrant in the market, it will be extremely difficult for the company to initially compete with the established market leaders or firms dominating the market.
Hence, SpeakEasy can perhaps consider acquiring or merging with some of the firms producing or specializing in voice-recognition software that will eventually ease the burden of market competition or rivalry for the company and consequently,it can commercially and economically grow and prosper in the market by capturing new customers and expanding market share.
Mergers or acquisitions, in this case, would help the company to effectively focus on its specialized activities and conducts through knowledge sharing, economies of scale or lower average production cost,transfer or transmission of technological knowledge and exploration of new customer or client bases.

3 0

3 years ago