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victus00 [196]
3 years ago
15

David knows that the beta of his portfolio is equal to 1, but he does not know the risk-free rate of return or the market risk p

remium. He also knows that the expected return on the market is 7.50 percent. What is the expected return on David’s portfolio?
Business
1 answer:
Furkat [3]3 years ago
6 0

Answer:

7.5%

Explanation:

Since the beta of this portfolio is 1, it means that it is perfectly synced with the market rate of return. We are told that the market rate of return is 7.5%, so that means that the expected rate of return of the portfolio should also be equal to 7.5%.

Beta measures the volatility of the portfolio or the stocks in relation to the market. If the stock is less volatile, the beta will  be less than 1, if the stock is more volatile, the beta will be more than 1.

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The overarching purpose of credit risk analysis is to: Question 11 options: a) Identify credit opportunities b) Determine a comp
Kamila [148]

Answer:

d) Quantify potential credit losses

Explanation:

Credit risk is the possibility of a loss happening because of a borrower's failure to payback a loan or meet up with contractual obligations. The overaching purpose of credit risk analysis is the quantification of the level of credit risk that the borrower poses to the lender. The purpose of credit analysis is to determine if borrowers are credit worthy by quantifying the risk of loss that the lender may experience.

Therefore option D is the answer.

6 0
3 years ago
A firm has estimated the following demand function for its product:
Rom4ik [11]

Answer:

(i) Q=300

(ii) Elasticity of Demand=-3.33 (elastic)

(iii) Income Elasticity= 2.5 (normal good)

(iv) Advertising Elasticity: 1.5

Explanation:

The Demand function is given by

Q=100-5P+5I+15A

(1) To solve (i) we need to replace P = 200, I = 150, and A = 30 in the demand equation:

Q=100-5(200)+5(150)+15(30)=300

(2) To find the price elasticity (how much quantity demanded changes with price) we use the point price elasticity formula

\eta_{Price}=\frac{\Delta Q}{\Delta P}\frac{P}{Q}

From the above equation we get: \frac{\Delta Q}{\Delta P}=-5

Replacing in the elasticity formula

\eta_{Price}=-5\frac{200}{300}=|-3.33|>1

in absolute terms the elasticity is bigger than one so it is an elastic demand.

(3) For income elasticity (how much quantity demanded changes with income), we proceed similarly as above. But the derivative is respect to income

\eta_{Income}=\frac{\Delta Q}{\Delta I}\frac{I}{Q}=5\frac{150}{300}=2.5>1[/tex]

Which is bigger than one, denoting this is a normal good because it's bigger than one.

(4) Advertising elasticity (how much quantity demanded changes with expenditures in advertising), we proceed as before

\eta_{advertising}=\frac{\Delta Q}{\Delta A}\frac{A}{Q}=15\frac{30}{300}=1.5

3 0
3 years ago
]the cycle in which money changed hands resulted in profits for businesses and salaries for workers.
Georgia [21]

The cycle of money where it results to profits for business and salaries for workers are when we pay money for the services or things that we buy and this ends when we receive the items and services we need. Cash conversion is also another term for this cycle.    

7 0
3 years ago
Kaiser Industries has bonds on the market making annual payments, with 14 years to maturity, a par value of $1,000, and selling
9966 [12]

Answer:

The Coupon rate is 11.66%

Explanation:

Yield to maturity is the annual rate of return that an investor receives if a bond bond is held until the maturity.

Face value = F = $1,000

Selling price = P = $1,382.01

Number of payment = n = 14 years

Bond Yield = 7.5%

The coupon rate can be calculated using following formula

Yield to maturity = [ C + ( F - P ) / n ] / [ (F + P ) / 2 ]

7.5% = [ C + ( $1,000 - 1,382.01 ) / 14 ] / [ ( $1,000 + $1,382.01 ) / 2 ]

7.5% = [ C - $27.29 ] / $1,191

7.5% x $1,191 = C - $27.29

$89.33 = C - $27.29

C = $89.33 + $27.29 = $116.62

Coupon rate = $116.62 / $1,000 = 0.11662 = 11.66%

4 0
3 years ago
In a business class where team members are arguing over content choices for a powerpoint presentation, it might help to remind e
GREYUIT [131]
<span>The example indicates that the strategy is Appeals to common goals. If you wish to obtain the cooperation of another person, it is very useful to identify some goal or objective that you share with that other person, which can be called a common goal, or a goal that you have in common.</span>
6 0
3 years ago
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