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taurus [48]
3 years ago
8

Which of the following statements about portfolio diversifications are correct? Check all that apply. The risk of a portfolio de

clines as the number of stocks in the portfolio increases. By adding enough partially correlated stocks, risk can be completely eliminated. The higher the stocks’ correlation coefficients, the lower the portfolio’s risk. Stocks with perfectly negatively correlated returns do not exist.
Business
1 answer:
Nastasia [14]3 years ago
5 0

Answer:

The risk of a portfolio declines as the number of stocks in the portfolio increases.

Explanation:

In simple words, diversification refers to the benefit of lesser risk that a manager gets by adding negatively or less correlates securities in the portfolio.

However, it is a fact that risk can only be minimized and cannot be eliminated completely. The risk that is specific to the business is called systematic risk and due to its unpredictability it cannot be diversified away.

      Thus, from the above we can conclude that the correct option is A.

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Moody Farms just paid a dividend of $3.95 on its stock. The growth rate in dividends is expected to be a constant 5 percent per
Amiraneli [1.4K]

Answer:

$81.52

Explanation:

The current share price is the present value of future dividends as well as the present value of the terminal value of dividends beyond year 6 as shown thus:

Current dividend=$3.95

Year 1 dividend=$3.95*(1+5%)=$4.15

Year 2 dividend=$4.15*(1+5%)=$4.36

Year 3 dividend=$4.36*(1+5%)=$4.58

The required rate of return(discount rate) for the dividends in the FIRST 3 years above is 14%

Year 4 dividend=$4.58*(1+5%)=$4.81

Year 5 dividend=$4.81*(1+5%)=$5.05

Year 6 dividend=$5.05*(1+5%)=$5.30

The required rate of return(discount rate) for the dividends in the NEXT 3 years above is 12%

Terminal value of dividend=Year 6 dividend*(1+growth rate)/(rate of return-growth rate)

growth rate=5%

rate of return=10%(rate of return thereafter)

terminal value=$5.30*(1+5%)/(10%-5%)

terminal value=$111.30

current share price=$4.15/(1+14%)+$4.36/(1+14%)^2+$4.58/(1+14%)^3+$4.81/(1+12%)^4+$5.05/(1+12%)^5+$5.30/(1+12%)^6+$111.30/(1+10%)^6

current share price=$81.52

5 0
3 years ago
Stanley hart invested in a municipal bond that promised an annual yield of 6.7 percent. the bond pays coupons twice a year. what
shtirl [24]
The effective interest rate is given by

r= \left(1+\frac{i}{t}\right)^t-1

Given that the <span>bond yeilds an annual yield of 6.7 percent and pays coupons twice a year.

The effective interest rate is given by:

r= \left(1+\frac{0.067}{2}\right)^2-1  \\  \\ =(1+0.0335)^2-1 \\  \\ =(1.0335)^2-1=1.0681-1 \\  \\ =0.0681=6.81\%</span>
3 0
3 years ago
Shamrock, Inc. purchases land for $490000 cash. The clinic assumes $5300 in property taxes due on the land. The title and attorn
Leviafan [203]

Answer:

$504,300

Explanation:

The total cost of the land that Shamrock Inc. purchased has to include:

  • the actual price paid for the land: $490,000
  • legal fees and real estate commissions: $2,600
  • taxes due and permits, zoning fees, etc: $5,300
  • site preparation (includes land grading): $6,400

The total cost of the land is: $504,300

3 0
3 years ago
In ________ organizational cultures, more individuality is shown through the organization's rules being less strictly applied.
kap26 [50]

Answer:

weak

Explanation:

An organization's culture describe the behavior of an organization. It comprised of the beliefs and values that should be shared in the organization

In the case when there is a weak organization culture so here the rules of the organization should be less strictly followed instead of more strictly followed as it is a weak organization structure

Therefore the weak should be the term that should be applied in the current situation

3 0
3 years ago
The LaGrange Corporation had the following budgeted sales for the first half of the current year:
Oxana [17]

Answer:

$168,250

Explanation:

Total Cash Collection would include cash collected from both Cash Sales and Credit Sales.

<u>Summary for Calculation of January Cash Collected</u>

Cash Sales                                                        $60,000

Credit Sales :

For January Sales ($160,000 × 45%)              $72,000

For December Sales ($55,000 × 55%)           $30,250

For November Sales ($30,000 × 20%)             $6,000

Total Collection                                               $168,250

Conclusion :

The total cash collected during January by LaGrange Corporation would be $168,250

3 0
3 years ago
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