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Y_Kistochka [10]
3 years ago
5

The Royal Seattle Investment Club has​ $100,000 to invest in the equity market. Frasier advocates investing the funds in KSEA Ra

dio with a beta of 1.6 and an expected return of 16.8​%. Niles advocates investing the funds in Northwest Medical with a beta of 1.1 and an expected return of 14.7​%. The club is split​ 50/50 on the two stocks. You are the deciding​ vote, and you cannot pick a split of​ $50,000 for each stock. Before you​ vote, you look up the current​ risk-free rate​ (the one-year U.S. Treasury bill with a yield of 4.00​%). Which stock do you​ select?
Business
1 answer:
madam [21]3 years ago
5 0

Answer:

Northwest Medical

Explanation:

In this question, we have to find out the risk to reward ratio for stocks

KSEA Radio = (Expected return - risk free rate) ÷ (Beta)

                     = (16.8% - 4%) ÷ (1.6)

                     = 8%

Northwest Medical = (Expected return - risk free rate) ÷ (Beta)

                               = (14.7% - 4%) ÷ (1.1)

                               = 9.72%

By comparing these two stocks, we get to know that the Northwest Medical  gives high return then the KSEA Radio .

So, Northwest Medical should be selected

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the answer to ur question is industry


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3 years ago
The owner of Shady Grove Company has the bookkeeper write company checks to pay for his personal items. This violates __________
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Answer:

The separate-entity assumption

Explanation:

The separate-entity assumption is a principal in accounting according to which the financial transactions of a business and the personal expenses of the owners is to kept separate from each other. The expenses derived solely for the business is only to be counted under the expenses of the company. Inclusion of any personal expenses of the owner or any partner of the business is prohibited under this principal.  

In the given excerpt, the owner of Shady Grove Company had violated the separate-entity assumption by including the expenses of his personal items under the name of the Company.

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3 years ago
A small business has determined that the machinery they currently use will wear out in 16 years. To replace the new machine when
Afina-wow [57]

Answer:

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Explanation:

Given:

Number of year (n) = 16 years x 4 quarter = 64

Rate of interest (r) = 1.6% = 0.016 / 4 = 0.004

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Present\ value = \frac{Future\ value}{(1+r)^n}\\\\Present\ value = \frac{280,000}{(1+0.004)^{64}}\\\\Present\ value = \frac{280,000}{1.291}\\\\Present\ value = 216,886.135

Present value deposit today = 216,886 (Approx)

8 0
3 years ago
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4 0
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sp2606 [1]

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Neither

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Neither of the project should be selected because the IRR of both projects is less than their required returns

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