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wolverine [178]
2 years ago
12

You observe a portfolio for five years and determine that its average return is 12.5​% and the standard deviation of its returns

in 19.5​%. Would a​ 30% loss next year be outside the​ 95% confidence interval for this​ portfolio?
Business
1 answer:
mihalych1998 [28]2 years ago
8 0

Answer:

Yes, you can be confident that the portfolio will not lose more than 30% of its value next year

Explanation:

In this question , the average return of portfolio is 12.5% and the standard deviation is 19.5%. It is estimated that there will be 30% loss next year. The confidence interval is 95%.

Range = Average return ± 2 x Standard deviation Low aid = 12.5% - (2 x19.5%) =12.5% -39% = -26.5%

High end = 12.5% +(2 x19.5%) =12.5%+39% = 51.5%

Thus, the low end is

26.5%

The range of return at 95% confidence interval is -26.5% to 51.5%

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Suppose the governments of two different economies, economy A and economy B, implement a permanent tax cut of the same size. Inv
timama [110]

Available Options Are:

a) higher sensitivity to changes in the interest rate, or

b) lower sensitivity to changes in the interest rate

Answer:

Option A. Higher sensitivity to changes in the interest rate

Explanation:

The reason is that the tax cut will encourage foreign investment and this increase in Foreign Investment will increase the GDP but by small amount. However, the higher interest rate in an economy always raises additional money in an economy which companies invest to purchase the new GDP. Thus the GDP growth is highly sensitive to changes in interest rate.

8 0
3 years ago
How is a credit union different from a retail bank
a_sh-v [17]
Credit unions are not-for-profit financial cooperatives. Whose earnings are paid back to members in the form of higher saving rates and lower loan rates.Banks are for profit businesses with earning paid to stockholders only.
7 0
2 years ago
Read 2 more answers
The company has 15 employees, who earn a total of $1,960 in salaries each working day. They are paid each Monday for their work
I am Lyosha [343]

Answer:

Preparation of the adjusting entries as of December 31, 2015.

Dr Salaries Expense 3,920

Cr Salaries Payable 3,920

Explanation:

Since we were been told in the question that all the 15 employees worked the first 2 days of that week, the Adjustment we therefore be $3,920( 1,960×2) . And the transaction will be recorded as:

Dr Salaries Expense 3,920

Cr Salaries Payable 3,920

The Adjustment will be :

1,960 x 2 = 3,920

Therefore the pay that occured in New Year's Day will not be used because it falls in the next year.

4 0
3 years ago
Which of the following is most likely to occur as you add randomly selected stocks to your portfolio, which currently consists o
jarptica [38.1K]

Answer: b. The diversifiable risk of your portfolio will likely decline, but the expected market risk should not change.

Explanation:

Diversifiable risk is a risk that a particular security has or which can be seen in a certain sector. Market risk occurs when there's possibility that a particular investor will make loss due to certain factors which affects the entire market.

In the above scenario, the most likely to occur will be that the diversifiable risk of the portfolio will likely decline, but the expected market risk should not change.

It should be noted that diversification won't eliminate market risk. When more stocks are added, this brings about decline in diversification risk but market risk won't change.

5 0
3 years ago
6. Explain how liabilities of an LLC (taxed as a partnership) or an S corporation affect the amount of tax losses from the entit
Natasha_Volkova [10]

Answer:

LLC liabilities are included as part of member's tax basis while S corporation liabilities are not.

Tax rules favors LLCs.

Explanation:

LLC liabilities are included as part of a member's tax basis while S corporation liabilities are not included in an S corporation shareholder's tax basis other than loans from the shareholders.

This distinction is important because the amount of loss a member or shareholder may deduct is limited to his or her tax basis in either his or her LLC interest or shares. Thus in this particular regard Tax rules favors LLCs.

7 0
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