Answer:it’s c.A project if it’s rate of return>0
Explanation:
By observing a person's emotions one can identify the person's emotions.
The question is incomplete. Here is the complete question:
The following annual returns for Stock E are projected over the next year for three possible states of the economy. What is the stock’s expected return and standard deviation of returns? E(R) = 8.5% ; σ = 22.70%; mean = $7.50; standard deviation = $2.50
State Prob E(R)
Boom 10% 40%
Normal 60% 20%
Recession
30% - 25%
Answer:
The expected return of the stock E(R) is 8.5%.
The standard deviation of the returns is 22.7%
Explanation:
<u>Expected return</u>
The expected return of the stock can be calculated by multiplying the stock's expected return E(R) in each state of economy by the probability of that state.
The expected return E(R) = (0.4 * 0.1) + (0.2 * 0.6) + (-0.25 * 0.3)
The expected return E(R) = 0.04 + 0.12 -0.075 = 0.085 or 8.5%
<u>Standard Deviation of returns</u>
The standard deviation is a measure of total risk. It measures the volatility of the stock's expected return. The standard deviation (SD) of a stock's return can be calculated by using the following formula:
SD = √(rA - E(R))² * (pA) + (rB - E(R))² * (pB) + ... + (rN - E(R))² * (pN)
Where,
- rA, rB to rN is the return under event A, B to N.
- pA, pB to pN is the probability of these events to occur
- E(R) is the expected return of the stock
Here, the events are the state of economy.
So, SD = √(0.4 - 0.085)² * (0.1) + (0.2 - 0.085)² * (0.6) + (-0.25 - 0.085)² * (0.3)
SD = 0.22699 or 22.699% rounded off to 22.70%
Answer:
1.25
Explanation:
The Capital Asset Pricing model will be used
ße = ßa × [Ve + Vd(1 – T)] / Ve
Here
ße = 1.08
Ve = Value of equity $50 million
Vd = Value of debt $10 million
T is tax rate which is 21%.
By putting the values, we have:
ße = 1.08 × [50 + 10(1 – 21%)] / 50
ße = 1.25
The beta equity of Chocolate Cookie is 1.25 which shows higher risk than average risk.
Obtain a customer signed statement acknowledging that an annuity transaction is not recommended if a customer decides to enter into an annuity transaction that is not based on the insurance producer's or insurer's recommendation.
<h3>Who is responsible for verifying your suitability?</h3>
The insurer or third party delegate authorized pursuant to section 224.
6(c) of Regulation 187 conducts a suitability review prior to the issuance of an insurance product or the effectuation of a sales transaction; and.
The insurer has procedures designed to prevent financial exploitation and abuse.
<h3>What factors are important considerations when determining suitability of an annuity sale?</h3>
Suitability Information Gathered by an Insurer
- Age.
- Annual income.
- Financial situation and needs, including the financial resources you're using to fund the annuity.
- Financial experience.
- Financial goals and objectives.
- Intended use of the annuity.
- Financial time horizon.
Learn more about insurance here:
<h3>
brainly.com/question/15171641</h3><h3 /><h3>#SPJ4</h3>
