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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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Mobray Corp. is experiencing rapid growth. Dividends are expected to grow at 32 percent per year during the next three years, 22
KatRina [158]

Answer:

$1.3794

Explanation:

The computation of the projected dividend for the coming year is shown below:

Last year dividend paid = Do

Expected Dividend in Year 1 (D1) = Do ( 1+g) = Do × 1.32

Dividend in Year 2 (D2) = Do ( 1+g)^2  = Do × 1.32^2

Dividend in Year 3 (D3) =  Do ( 1+g)^3 = Do × 1.32^3

Dividend in year 4 , (D4) = D3 ×  (1+g) = Do × 1.32^3 × 1.22

Now the price at year 4 is

P4 = D4 × (1+g) ÷ ( R-g )

= Do × 1.32^3 × 1.22 × (1 + 0.07 ) ÷ ( 0.10 - 0.07 )

= Do × 100.08

Use Gordon Growth Model

The Current Price of Stock is

= D1 ÷ ( 1+ R)^1 +D2 ÷ ( 1+ R)^2 + D3 ÷ ( 1+ R)^3 + D4 ÷ ( 1+ R)^4 + P4 ÷ ( 1+ R)^4

$78  = Do ( 1.32 ÷ 1.1 + 1.32^2 ÷ 1.1 ^2 + 1.32^3 ÷ 1.1^3 +1.32^3 × 1.22 ÷ 1.1^4 + 100 .08 ÷ 1.1^4)  

$78 = Do ( 1.2 +1.44 + 1.728 + 1.9165 + 68.36 )

Do = $1.045

Now

Projected Dividend for Year 1 is

= Do × 1.32

= $1.045 × 1.32

= $1.3794

8 0
3 years ago
William pays $500 premium every six months for automobile insurance with collision coverage. His deductible is $750. William cau
stich3 [128]

<span>A collision coverage type of insurance only the covers the cost that is incurred due to damage to your car. It does not include the cost for the other car. Therefore you will have to pay the total of $1,100</span>

6 0
3 years ago
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Retained earnings balance at the beginning of the year $ 135,000 Cash dividends declared for the year 55,000 Proceeds from the s
olganol [36]

Answer:

$51,200 was the cash dividends paid

Explanation:

Cash dividends paid=opening cash dividends payable +cash dividends declared-closing cash dividends payable

opening cash dividends payable is $27,000

cash dividends declared is $55,000

closing cash dividends payable is $30,800

cash dividends paid =$27,000+$55,000-$30,800=$51,200

The amount of cash transfers made in respect of shareholders dividends in the year is $51,200.

The logic is that the whatever is left unpaid at year end should be deducted from the balance owed year plus the new dividends declared this year

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Which type of business ownership represents a hybrid between a partnership and corporation by allowing up to 100 shareholders wi
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<u>Answer:</u>Option 2 limited liability partnership

<u>Explanation:</u>

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The LLP should have minimum two partners and maximum is not a limit. If there is any financial loss for the business it need not be borne by the partners.

7 0
3 years ago
Donna’s philosophy as she coordinates her firm’s marketing efforts is to keep in mind the company’s overarching strategy, and to
klio [65]

Answer:

Explanation:

Integrated Marketing Communications or IMC is an approaching in marketing that seeks to ensure a unified experience for a firm's customers, marketing efforts and even mangement across various channels of communication. IMC tries to ensure that a links are maintained among all forms of messages and communications between the firm and its consumers.

IMC not only ensure the integration of promotional or marketing tools to ensure harmony, it also ensures that marketing activities are constantly in line with the firm's strategies and objectives.

IMC seeks to integrate all levels of communcation including vertical, horizonal, external and internal levels of communication to strengthen its communcation lines and marketing activities.

Donna's approach constantly marries her  firm's marketing activities with the company's strategies and goals through an integrated communication system that is constantly and consistently active for instructions as well as feedbacks. The approach believes that an organisation's objectives are better and easily achieved when all communication tools and channels work in harmony to create one voice.

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3 years ago
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