Answer:
d. An index fund with beta = 1.0 should have a required return of 11%.
Explanation:
required rate of return for a market indexed portfolio = 6% + (1 x 5%) = 11%
If the required rate of return is less than 11%, the beta is lower than 1.
If the required rate of return is more than 11%, the beta is larger than 1.
If beta doubles, then the required rate of return = 6% x (2 x 5%) = 16%
The answer to this question is False.
Answer:
The company should increase the number of units she is producing
Explanation:
Since the elasticity of demand for the product is greater than one (1.4), it means the demand for the new drug is elastic, meaning the demand for the new drug is sensitive to price – the higher the price, the lower the quantity demanded and the vice-versa. So the pharmaceutical company should be careful of charging higher than the other competitors.
What the company needs to do to increase its revenue is to produce large quantity of the drug in order to earn higher and gain larger market share and probably economies of scale.
For example, If the company produces 400 units of the drug at $2, the revenue will be $800.
To increase the revenue, the company needs to increase its production.
For example, the increases the production to 500 units at the prevailing price of $2, therefore, the revenue will be $1000
Answer:
$310,000
Explanation:
The computation of the projected initial cash flow is shown below:
Project's initial cash outflow= Increased inventory + increased accounts receivable - increased debt + spending amount for the expansion of the size of the showroom
= $150,000 + $35,000 - $75,000 + $200,000
= $310,000
We simply applied the above formula to find out the initial cash flow
The option that best describes the difference between stocks and bonds is <span>B.</span><span> Stocks allow investors to own a portion of the company; bonds are loans to the company.
When you have stocks, it means that you bought one "part" of a company, and in case that company gets sold one day, you will get a profit for what you bought. Bonds are quite the opposite - it is the money a company borrows from someone in order to pay something.</span>
