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Ghella [55]
2 years ago
7

Assume that the economy has three types of people. 20% are fad followers, 75% are passive investors, and 5% are informed traders

. The portfolio consisting of all informed traders has a beta of 1.4 and an expected return of 16%. The market has an expected return of 10% and the risk-free rate is 4%. The alpha for the informed investors is closest to:
Business
1 answer:
Ratling [72]2 years ago
8 0

Answer:

3.6%

Explanation:

The computation of the alpha for the informed investors is shown below:

As we know that

Expected rate of k = Risk free rate of return + Beta × (Market rate of return - Risk free rate of return) + Alpha

16% = 4% + 1.4 × (10% - 4%) + Alpha

16% = 4% + 8.4% + Alpha

16% = 12.4% + Alpha

So,

Alpha = 3.6%

We simply applied the above formula to determine the alpha

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The following transactions occurred during March 2016 for the Wainwright Corporation. The company owns and operates a wholesale
Triss [41]

Answer:

1. Financing Activity : $300,000

2.Investing Activity : $10,000 and Non-cash Financing and Investing Activity : $30,000

3.Operating Activity : - $90,000

4.Operating Activity :   $50,000

5.Operating Activity :  -$5,000

6.Operating Activity :  -$6,000

7.Operating Activity :  -$70,000

8.Operating Activity :   $55,000

9.Operating Activity :   $1,000

Explanation:

Operating Activities involves the entity`s trading operation in ordinary course of business.

Investing Activities involves the entity`s sale or purchase of Investments.

Financing Activities involves the entity`s acquisition and sale of funds.  

6 0
3 years ago
The number of dependents that people are choosing to have is ?
joja [24]

Current demographic trends show that the number of dependents that people choose to have is <u>Decreasing</u>.

<h3>What is the trend in dependants?</h3>

A general trend that has been noticed in recent years is that people are choosing to have less dependants such as children.

The top reasons for this include more education and increased economic hardship.

Find out more on trends in population growth at brainly.com/question/521129.

#SPJ1

5 0
2 years ago
Car insurance that pays for your injuries when you are in an accident in your car is ? insurance?
zmey [24]

Hi The type of insurance is called Bodily injury coverage

6 0
3 years ago
The following information was available for the year ended December 31, 2019 Net sales Cost of goods sold Average accounts recei
Tom [10]

Answer:

a. Inventory Turnover:

= Cost of goods sold / Average inventory for the year

= 642,400 / 210,000

= 3.06

b. Number of days' sales in inventory

= Ending inventory / (COGS / 365)

= 156,409 / (642,400 / 365)

= 88.9 days

c. Accounts receivable turnover

= Net sales / Average Accounts Receivable

= 1,022,000 / 43,000

= 23.77 times

d. Number of days sales in accounts receivable

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= 22,400 / (1,022,000 / 365)

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3 0
3 years ago
Clarissa wants to fund a growing perpetuity that will pay $6000 per year to a local museum, starting next year. She wants the an
likoan [24]

Answer:

She needs $150,000 to fund this perpetuity.

Explanation:

In this question we need to find the present value of this perpetuity. Because this is a growing perpetuity we will need to use the formula of present value of a growing perpetuity.

PV of growing perpetuity = Payment/ R-G

The payment is the current payment the perpetuity will pay which is 6,000, R is the interest rate which is 10% and G is the growth rate of the perpetuity which is 6%. Now we will input these values in the formula in order to find the present value of the perpetuity.

6,000/0.1-0.06

=6,000/0.04

=150,000

4 0
3 years ago
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