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kicyunya [14]
3 years ago
15

An investor prefers to invest in companies that have high operating leverage. How can this be accomplished if the investor also

requires a portfolio beta of 1.0?
A. Invest 50% in cyclical stocks and 50% in firms with high operating leverage
B. Invest 50% in a market index fund and 50% in firms with high operating leverage
C. Finance part of the portfolio with borrowing
D. Invest a portion of the portfolio in U.S. Treasury securities
Business
1 answer:
Fittoniya [83]3 years ago
3 0

Answer:

B

Explanation:

Systemic risk are risk that are inherent in the economy. They cannot be diversified away. They are also known as market risk. examples of this risk include recession, inflation, and high interest rates. Investors should seek compensation for systemic risk. Systemic risk is measured by beta. The higher beta is, the higher the systemic risk and the higher the compensation demanded for by investors

Market index fund is riskless and would have a beta of 1

by investing half in a riskless and half in a risky asset. beta would be equal to 1

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The correct answer is negative cash flow.

When a company has a situation where their revenue is less than their operating expenses they have a negative cash flow. This is normally indicative that a company is not doing well and may need to make changes in order to become profitable.

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3 years ago
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During its first year of operations, Silverman Company paid $12,385 for direct materials and $10,600 for production workers' wag
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Answer:

Finished goods inventory final balance= 12, 495

Explanation:

PRODUCTION COST COMPONENTS

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TOTAL PRODUCTION COST = 32,585

TOTAL UNITS PRODUCED = 6,650

UNIT COST= (Total Production Cost / Total Units Produced) = 32,585 / 6,650 = 4.9  

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FINAL GOODS INVENTORY AMOUNT = (Final goods Inventory * Unit Cost) = 2,250 * 4.9 = 12,495

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3 years ago
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Answer:

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On the other hand, the inferior goods have a negative income elasticity. So when the income of the consumer increases the demand for inferior goods decline. This is because as income increases, the consumers will prefer normal goods.

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I hope my answer helps you

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