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kolbaska11 [484]
3 years ago
6

You expect General Motors (GM) to have a beta of 1.5 over the next year and the beta of Exxon Mobil (XOM) to be 1.9 over the nex

t year. Also, you expect the volatility of General Motors to be 50% and that of Exxon Mobil to be 35% over the next year. Which stock has more systematic risk? Which stock has more total risk?
Business
1 answer:
kifflom [539]3 years ago
8 0

Answer:

Which stock has more systematic risk?

  • Exxon Mobil (XOM)

Which stock has more total risk?

  • General Motors (GM)

Explanation:

Systematic risk refers basically to the stock's risk compared to the market risk, when the stock's beta = 1, its systematic risk is the same as the market risk. In this case, since XOM has a larger beta than GM, then its systematic risk is higher.

To calculate which stock has a higher total risk I just multiply the stock's beta times the expected volatility, and GM's risk is higher.

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6 0
2 years ago
Required Information
il63 [147K]

Answer:

$1140.28

Explanation:

The computation of the net present value of this investment is shown below:-

= Annual Cash flows × Present Value of Annuity Factor (r , n) - Initial Investment

as

Annual cash flows = $8600

Present Value of Annuity Factor (r , n)

r = 10% and n = 4 years

So, the Present Value of Annuity Factor will be the sum of the present value of 4 years at 10%

For Year 1 = 0.9091

For Year 2 = 0.8264

For Year 3 = 0.7513

For Year 4 = 0.6830

Total = 3.1698

Therefore,

Net Present Value = (Cash inflow × Total) -

Initial Investment

= ($8600 × 3.1698) - $26,120  

= $27,260.28 - $26,120

= $1140.28

6 0
3 years ago
KLM Corporation's quick assets are $6,123,000, its current assets are $13,440,000 and its current liabilities are $8,144,000. It
galben [10]

Answer:

the acid-test ratio is 0.75 times

Explanation:

The computation of the acid-test ratio is shown below:

We know that

Acid-test ratio is

= Quick assets ÷ current liabilities

= $6,123,000 ÷ $8,144,000

= 0.75 times

Hence, the acid-test ratio is 0.75 times

basically we divided the quick assets from the current liabilities so that the acid-test ratio could come

8 0
3 years ago
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3 years ago
When you are considering changing careers, it is important to manage the process to achieve your desired outcome.
Svetach [21]
Im fairly certain its True
8 0
3 years ago
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