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svet-max [94.6K]
3 years ago
9

We can conclude from the above information that any rational, risk-averse investor would be better off adding Security AA to a w

ell-diversified portfolio over Security BB. a. True b. False
Business
1 answer:
romanna [79]3 years ago
4 0

Answer: False

Explanation:

First calculate the expected value for both securities:

Security AA:

= (0.2 * 30%) + (0.6 * 10%) + (0.2 * -5%)

= 6% + 6% + (-1%)

= 11%

Security BB

= (0.2 * -10%) + (0.6 * 5%) + (0.2 * 50%)

= -2% + 3% + 10%

= 11%

<em>They both have the same expected return so the investor will be indifferent. Statement is therefore false.</em>

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There is a 15 percent probability the economy will boom; otherwise, it will be normal. Stock G should return 15 percent in a boo
Bess [88]

Answer

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

You will find the procedures, formulas or necessary explanations in the archive attached below. If you have any question ask and I will aclare your doubts kindly.  

Download xlsx
4 0
4 years ago
Donald, the CEO of a multinational organization, is given a reward by the organization in the form of a contract that allows him
Vaselesa [24]

Answer:

stock-option plan

Explanation:

Stock-option plan -

It is a form of equity compensation , which is given to the employees , in order to attract them , is referred to as stock - option plan .

According to this plan , the employees are provided with the right to buy some specific shares of the company they are working in , for some specific period of time  , and for some fixed amount .

It is like a regular call , for giving the right to the employees .

This plan helps the employees to get motivated to work hard and increase their performance .

Hence , from the given scenario of the question ,

Donald is provided with the stock - option plan .

8 0
3 years ago
Avocado Incorporated just paid a dividend of $3. An analyst expects this dividend to grow at a rate of 12% for the next 3 years.
yuradex [85]

Answer:

The most you should pay for this stock is 126.89

Explanation:

The dividend in years 1 – 3 will grow at 12% and then at 5% forever.  

We had to get the PV for the dividends in years 1-3 (year 3 also includes the estimated future value of the stock).

We used our calculators to find the PV of each year at the 8% discount rate.  Finally we will add them all together to get the final answer.

We find the future dividends using g =12%

Dividend in year 0 --->

Dividend in year 1 ---> 3.36

Dividend in year 2 ---> 3.76

Dividend in year 3 ---> 4.21

Dividend in year 4 ---> 4.43

Now we will calculate the present value of the future dividends using r = 8%

Stock Value assuming constant growth rate  = 147.52 --(a)

PV in year 1 ---> 3.11

PV in year 2 ---> 3.23

PV in year 3 ---> 120.45  --(discounting (a))

= 120.45 + 3.23 + 3.11

= 126.89

4 0
3 years ago
Cool Fan Company sells 10,000 units to wholesalers each year at $60 per unit. The materials cost $10 per fan and unit labor cost
eimsori [14]

Answer:

e. $ 350,000

Explanation:

Given: Total number of units= 10000.

           Selling price= $60 per unit.

           The material cost= $10 per fan

           Labor cost= $15 per unit.

           Promotion and marketing cost= $100000.

           Facility expense= $80000.

           Other overhead cost= $20,000.

Now, finding the variable cost of fan.

Variable cost= Total\ material\ cost + Labor\ cost

Variable cost= (\$ 10\times 10000+ \$ 15 \times  10000)

⇒ Variable cost= \$ 100000+\$ 150000= \$ 250000

∴ Variable cost= $250000.

Selling price= (\$ 60\times 10000)= \$ 600000

∴ Selling price of fan is $600000.

Unit contribution= (selling\ price - variable\ cost)

Next find the unit contribution of each fan.

⇒ Unit contribution=  (\$ 600000 - \$ 250000)

∴ Unit contribution of each fan is $350000.

8 0
3 years ago
Dell Computers wants to reach all potential users of their products, both industrial buyers and final consumers. They would most
Vera_Pavlovna [14]

Answer:

The correct answer is letter "B": national.

Explanation:

National advertising refers to a marketing strategy in which a company aims to offer a good or service in the same proportion all over a country. This advertising is massive and involves promoting the corporation's product through different mediums of communications such as <em>television, radio, newspapers, </em>or <em>billboards</em>. The campaign is directed to individual consumers and organizations.

5 0
3 years ago
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