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3 years ago

The concept of risk and return is subjective for different people, as well as for corporations.

Business

1 answer:

Juli2301 [7.4K]3 years ago

3 0

Answer:

Risk and Return

1. Joe is an average investor. His financial advisor gave him options of investing in stock A, with a σ of 12%, and stock B, with a σ of 9%. Both stocks have the same expected return of 16%. Joe can pick only one stock and decides to invest in stock B.

Good Financial Decision?

Yes

2. Marcie works for an educational technology firm that recently launched its employee stock option plan (ESOP). Marcie allocated all her investments in the ESOP.

Good Financial Decision?

Yes

3. rin wants to invest in a hedge fund that has had a very strong performance track record. The hedge fund has given its investors a return of over 60% for the past five years. Although Erin is tempted to put her money in the fund, she decides to conduct due diligence on the hedge fund’s assets, because she is aware that past performance is no guarantee of future results.

Good Financial Decision?

Yes

Explanation:

1. Joe's decision to invest in stock B is a good financial decision. Since both investments have the same returns, the decision on which investment to take shifts to the standard deviation of the returns, which specifies the variability of the returns. Invariably, the investment with less standard deviation should win the vote. Therefore, Joe's decision is a good financial decision because investment in B has a standard deviation of 9% unlike A's 12%.

2. Putting all eggs in one market as Marcie had done by allocating all her investments in the ESOP is not a good financial decision, theoretically. It is always best to spread the risks, though higher-yielding investments (returns) bear higher risks.

3. The decision of Erin to conduct due diligence on the hedge fund's assets, despite its past performance is a good financial decision. Due diligence reveals some behind-the-scene information that are instrumental in making sound business decisions. Who are the present managers of the fund? What systems are in place in the entity to guarantee similar future performance, all things being equal? What market's sentiments and information are available for consideration? These questions, and many others can be answered through a due diligence. Surely, "past performance is no guarantee of future results."

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3 years ago

Novak’s Market recorded the following events involving a recent purchase of inventory: Received goods for $112000, terms 2/11, n

Arte-miy333 [17]

Answer:

Option (C) is correct

Explanation:

The payment is made during the discount period of 11 days so the 2% discount rate would be applicable.

Goods purchased = $112,000

Goods returned = $2,200

Discount = (Goods purchased - goods returned) × 2%

= ($112,000 - $2,200) × 2%

= $2,196

Net purchase = Goods purchased - returned - Discount

= $112,000 - $2,200 - $2,196

= $107,604

Total inventory cost = Net purchase + Freight cost

= $107,604 + $400

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Therefore, company’s inventory increased by $108,004.

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3 years ago

Give an example of a successful or unsuccessful transformational leader. What if anything about the context (e.g., industry, mar

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Answer:

Explanation:

One transformational leader that we can talk about was Martin Luther King Jr. who was an Activist and Minister who fought for American Civil Rights in the United States in the early 1950s. MLK jr. was both assisted and hindered by the time in history in which his efforts took place. This is because at the time African American Rights were almost non-existant and the Civil Rights movements were at an all time high. This means that MLK jr. was able to amass many followers as he was fighting to make the world a more equal place for everyone, but at the same time it was a time in history where racism was at an all time high as well. This hindered his efforts greatly and ultimately led to his death in 1968. Regardless, Martin Luther King Jr. made one of the biggest impacts in the Civil Rights movements in history as a transformational leader.

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3 years ago

Gains or losses on cash flow hedges are Group of answer choices ignored completely. recorded in equity, as part of other compreh

Helga [31]

Answer: The correct answer is "recorded in equity recorded in equity, as part of other comprehensive income.".

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3 years ago

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frosja888 [35]

Answer:

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option 1)

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option 2)

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8 0

3 years ago