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3 years ago

Now we will focus on Risk in a Portfolio Context.

Business

1 answer:

ololo11 [35]3 years ago

8 0

Answer:

See explanation below

Explanation:

Correlation Coefficient - The degree of the relationship between two variables.

Correlation - The tendency of two variables to move together.

Capital Asset Pricing Model - This represent the return that reflects risk remaining after diversification.

Market Portfolio - A portfolio consisting of all stocks.

Expected Return on a Portfolio - This represents the weighted average of the expected returns on individual components.

Market Risk Premium - The difference between the market rate of return and the risk free rate

Beta - The variable that shows the extent to which a stock’s return moves up or down with the market.

S&P 500 is empirically used to measure Beta

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Bretton, Inc., just paid a dividend of $3.15 on its stock. The growth rate in dividends is expected to be a constant 5 percent p

ArbitrLikvidat [17]

Answer:

$74.58

Explanation:

The price of share of the Bretton Inc in the given question shall be the present value of all the dividends associated with this share in the future years.

Present value of year 1 dividend=3.31(1+13%)^-1=$2.93

(3.15*1.05)

Present value of year 2 dividend=3.48(1+13%)^-2=$2.73

(3.31*1.05)

Present value of year 3 dividend=3.65(1+13%)^-3=$2.53

(3.48*1.05)

Present value of year 4 dividend=3.83(1+11%)^-4=$2.52

(3.65*1.05)

Present value of year 5 dividend=4.02(1+11%)^-5=$2.39

(3.83*1.05)

Present value of year 6 dividend=4.22(1+11%)^-6=$2.26

(4.02*1.05)

Present value of all the cash flows after 6 year=$59.22

[4.22(1+5%)/(9%-5%)]*(1+11%)^-6

Price of share $74.58

6 0

3 years ago

XYZ Law Firm provided services for a cllent for $5,000 cash and provided service for another for $10,000 that will pay for the s

Norma-Jean [14]

Answer: The income statement should reflect $15,000.

Explanation: The reason is because accounting procedures are always guided by certain principles or concepts. One of such concepts is the Realization Concept. This simply states that income is considered to have been earned when the goods/services have been dispatched /rendered to the client and the client has incurred liability for such (or has accepted his/her indebtedness). The Accrual Concept is also applicable in the above instance because this concept/principle states that revenues and expenses are recognized as soon as they are earned and incurred and not when money is expended or received. So basically, XYZ Law firm has provided services for two clients. One of them has paid while the other will pay sometime later. Both of them are already recognized as revenue and the current income statement will reflect revenue transactions to the tune of $15,000.

4 0

3 years ago

A research analyst at PDQ Securities mentions to a registered representative at that firm that a new research report is coming o

Sonja [21]

Answer:

Explanation:bvcx

8 0

4 years ago

XYZ Co. had 500 calculators, purchased at $3.5 per unit, on hand on 11/1/2019. Purchases and sales during the month of November

Wittaler [7]

Answer:

Value of ending inventory at 11/30/2019 using LIFO is $1,950

Explanation:

The calculators sold on 11/8 were taken from purchases of 11/21,200 units and purchases of 11/13,150 units,thereby leaving 150 units of calculators purchased on 11/13 in inventory.

However,the sale of 100 calculators on 11/28 were picked from the balance of 150 units left from stock of 11/13 thereby leaving 50 units purchased at $4 each and the opening inventory in closing inventory.

The computation of closing inventory value:

11/13/2019 50 calculators at $4 = $200

11/1/2019 500 calculators at $3.5=$1,750

Value of closing inventory $1,950

6 0

3 years ago

On a whim, you purchased a scratch-off lottery ticket at the gas station. it must have been your lucky day because you won $2,50

jok3333 [9.3K]

Answer: The winnings of $2,500,000 will grow to $3,781,474.31 if it is invested at 3% for 14 years, compounded annually.

Assuming that I'm logical and rational, I will invest the $2,500,000 at 3% for 14 years in an instrument that gives me compound interest that is compounded annually, as that will give me more money as compared to investing at simple interest.

We use the following formula to determine the Future Value of an investment:

$FV = PV * (1+r)^{n}$

where

FV = Future Value of an investment

PV = Present Value of an investment or amount invested

r = rate of interest per period

n = number of compounding periods for which the money is invested.

Since interest is compounded annually, the number of compounding periods is 14.

Substituting the values from the question in the equation above we get,

$FV = 2500000 * (1+0.03)^{14}$

$FV = 3781474.31$

3 0

4 years ago