Answer:
Stock's expected return = 12.90%
Standard Deviation = 29.68%
Coefficient of variation = 2.30
Sharpe ratio = 0.30
Explanation:
Note: See the attached excel file for the calculations of the Stock's expected return and Variance.
Given:
Risk-free rate = 4%.
From the attached excel file, we have:
Stock's expected return = Total of Stock's Expected Return = 0.1290, or 12.90%
Variance = Total of F = 0.0880890, or 8.8089%
Standard Deviation = Variance^0.5 = 0.0880890^0.5 = 0.2968, or 29.68%
Coefficient of variation = Standard Deviation / Stock's expected return = 29.68% / 12.90% = 2.30
Sharpe ratio = (Stock's expected return - Risk-free rate) / Standard Deviation = (12.90% - 4%) / 29.68% = 0.30
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Answer:
Donald's plans are not sound.
There is more to running a business than opening six stores in 12 months. How does he want to ensure that these stores will be opened and will become viable, attractive to customers, and be able to meet customers' needs.
Explanation:
A business does not exist in isolation. It exists for a purpose. The overarching purpose is to satisfy the needs of its customers. But, first things first. Is there a viable market for Donald's business ideas? Has Donald determined the size of this market? Is the market sustainable? What are the barriers for new entrants? What competition does this business face? What competitive advantage or otherwise will Donald Mac's enjoy or suffer? How can Donald Mac's overcome its competitive challenges? Can Donald show the cash flow projections for the proposed business? This and more pertinent questions need to be answered in the business plan, to make it sound convincing before potential investors.
Answer:
b. Asset Turnover &
d. Profit margin.
Explanation:
Return on asset (ROA) simply shows a percentage of how profitable companies assets are in generating the revenue. It is calculated as:
However, if we further break it down, we can write it as follows:
Both formulas Represent the same things.
But, the ratio of Net income to Sales is known as the Profit margin- A degree to which company makes money. Here, we can see how the ROA can be broken down in terms of profit margin.
Also, the ratio of Sales to Total asset is know as the Asset Turnover- a measure of company's use assets in generating the sales.
Hence, we can say that the ROA can be dis aggregated to reveal the Asset Turnover and the Profit margin.
