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Julli [10]
3 years ago
9

You are considering investing in a project with the following possible outcomes: Probability of Investment States Occurrence Ret

urns State 1: Economic boom 20% 16% State 2: Economic growth 40% 12% State 3: Economic decline 20% 5% State 4: Depression 20% -5% Calculate the standard deviation of returns for this investment. Round to the nearset hundredth percent. Answer in the percent format. Do not include % sign in your answer (i.e. If your answer is 4.33%, type 4.33 without a % sign at the end.)
Business
1 answer:
frutty [35]3 years ago
4 0

Answer:

SD = 0.0740270 or 7.40270 percent rounded off to 7.403 percent

Explanation:

To calculate the standard deviation of the investment, we must first calculate the expected or mean return of the investment. The expected or mean return can be calculated as follows,

r = pA * rA  +  pB * rB  +  ...  +  pN * rN

Where,

  • pA, pB, ... represents the probability of state occurrence
  • rA, rB, ... represents return A, return B and so on  under each state

r = 0.2 * 0.16  +  0.4 * 0.12  +  0.2 * 0.05  +  0.2 * -0.05

r = 0.08 or 8%

The formula to calculate the standard deviation of a stock/investment is as follows,

SD = √pA * (rA - r)²  +  pB * (rB - r)²  +  ...  +  pN * (rN - r)²

SD = √0.2 * (0.16 - 0.08)²  +  0.4 * (0.12 - 0.08)²  +  0.2 * (0.05 - 0.08)²  +  0.2 * (-0.05 - 0.08)²

SD = 0.0740270 or 7.40270 percent rounded off to 7.403 percent

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disa [49]
In the context of business management, the purpose of budgeting includes the following three aspects:

•A forecast of income and expenditure (and thereby profitability)

•A tool for decision making

•A means to monitor business performance
7 0
3 years ago
Read 2 more answers
A marketing manager has just estimated that her firm's marginal revenue will become negative if a proposed price cut is made.
Viktor [21]

Answer:

D. More Units may be sold - but total revenue will be less than it would be at the higher price

Explanation:

Marginal Revenue (MR) represents the additional revenue that can be obtained if sales of a product are increased by one unit.

MR= is change in Total Revenue/Change in Total Output Quantity

In this situation as envisaged by the Marketing Manager, a price cut will lead to an increase in revenue based on more (marginal) units of the product sold at a lower price. The challenge, however, is that this increase in income will not be enough to offset the decrease in revenue that will result as a result of the price cut.

In other words, the organisation is better off selling fewer products or units at its current price than sell more (marginal units) at a reduced price.

7 0
3 years ago
The Evendale Store is just one of many stores owned and operated by the company. The Apparel Department is one of many departmen
ExtremeBDS [4]

Answer:

<em>Direct cost for Apparel Department</em>

Apparel Department cost of sales—Evendale Store $116,100

Apparel Department sales commission—Evendale Store $7,950

Apparel Department manager’s salary—Evendale Store $9,950

<u><em>Total            134,000</em></u>

<em>Direct cost for Evendale Store</em>

Apparel Department cost of sales—Evendale Store $116,100

Store manager’s salary—Evendale Store $18,300

Apparel Department sales commission—Evendale Store $7,950

Apparel Department manager’s salary—Evendale Store $9,950

Janitorial costs—Evendale Store $13,700

<u><em>Total                 166,000</em></u>

<u><em /></u>

<em>Apparel Direct cost which are also variable</em>

<em>(change as object cost increase)</em>

Apparel Department cost of sales—Evendale Store $116,100

Apparel Department sales commission—Evendale Store $7,950

<u><em>Total                 124,050</em></u>

<u><em /></u>

Explanation:

a) we should consider which cost are directly linked into Apparel department only.

b) here we have to determinate cost directly linked into Evendale Store

c) While in this case, besides looking for cost linked to Apparel department, they also need to be variable thus, changing with the object cost.

5 0
3 years ago
Grear Tire Company has produced a new tire with an estimated mean lifetime mileage of 36,500 miles. Management also believes tha
gladu [14]

Answer:

1. The expected cost of production for each tire sold is $0.013 per tire.

2. Probability that Grear will refund more than $50 for a tire is 0.0107

Explanation;

1. Mileage is 36,500 miles

Standard deviation is 5,000 miles

Observed miles is 30,000 miles

100 miles failed at $1

Therefore;

(36,500 - 30,000) /5,000 = 1.3

To get the cost of production,

Since 100 miles equals $1 if fail

1.3 × 1 / 100

= $0.013 per tire.

2. P(Z<25,000 - 36,500/5,000)

= P(Z<-11,500/5,000)

=Z<2.3

Therefore,

1-0.9893

=0.0107

The probability that Grear will refund more than $50 for a tire is 0.0107

3 0
4 years ago
Select the correct answer.
stira [4]
Choice b would be my choice
4 0
3 years ago
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