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kicyunya [14]
2 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]2 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

You might be interested in
According to liquidity preference theory, money supply and money demand are balanced by adjustments of
givi [52]

Answer:

Nominal Interest rate

Explanation:

According to liquidity preference theory, money supply and money demand are balanced by adjustments of Nominal Interest rate. Suppose you have some money, you will decide to either keep it in cash or in the bank. If you keep the money in cash, the opportunity cost of keeping in cash is the interest rate earned if you would have kept the money in the bank. Bank offers the nominal interest rates and not the real interest rates. Bank rates are not adjusted for inflation. So if the interest rate on money increases the opportunity cost of holding money in cash increases. If money supply in the economy increases the demand for money will increase only by reducing the interest rate because then only people fir hold cash and demand higher money.  So, money supply and money demand are balanced by adjustments of the Nominal Interest rate.

5 0
2 years ago
Emily Casper earns a weekly salary of $785. How much will she make after four weeks?
OleMash [197]

Answer:

$3140

Explanation:

It is given that,

Weekly salary of Emily Casper is $785. We need to find her earning after 4 weeks. It is a type of question based on the unitary method.

1 week = $785

4 week = 4 × $785

= $3140

Hence, her salary after 4 weeks is $3140.

7 0
3 years ago
Lola owns a one-half interest in the Lenax LLC. Her basis in this ownership interest is $22,000 on December 31, 2016, after acco
Marina CMI [18]

Answer:

The answer is Lola should acknowledge a $3,000 from this distribution.

Explanation:

From the question given, we say that, Lola should acknowledge a $3,000 from this distribution.

Recall that

The Cash Distributed  cash = $ 25,000

The Basis in this ownership of interest is  = $22,000

The Gain = $3,000

Lola basis after the distribution is zero.

Therefore Lola should accept this distribution of a $ 3000

7 0
3 years ago
Consider the given simple economy. Sheepnip Co. makes sheep feed. Better-bald Inc. purchases sheep feed for the sheep it raises
schepotkina [342]

Answer:

Explanation:

1. What is the total payments (income) to factors of Better-bald Inc.?

Payments to factors of Better-bald Inc. = Rent+Wages+Interest payment+Profits = 450+300+100+750 = $1600

2. What is the total payments (income) to factors of Sweeter Sweaters Inc.?

Payments to factors of Sweeter Sweater Inc = Rent+Wages+Interest payment+Profits = 500+550+50+800 = $1900

3. If we use income method to calculate GDP, we need to sum the payment to factor of production by the entreprises in the economy who employ the factor of production.

The given economy has three enterprises: Better-bald, Sweater Sweaters, Sheepnip. Payment to factor of production are already calculated for 2 of them. Therefore, we there is a need to calculate for the Sheeping Co.

Payment to factors by Sheeping Co = 700 + 400 + 1000 + 100 = $2200

So GDP = $1600 + $1900 + $2200 = $5700

8 0
3 years ago
At December 31, Meyer Company had 500,000 shares of common stock issued and outstanding, 400,000 of which had been issued and ou
kicyunya [14]

Answer:

$1.2

Explanation:

The computation of earning per common share is shown below:

Earning per share = (Net income) ÷ (Number of shares)

where,

Net income = $510,000

And, the number of shares = $400,000 + $100,000 × (3 months ÷ 12 months)

= $400,000 + $25,000

= $425,000

The 3 months is calculated from October 1 to December 31

Now put these values to the above formula  

So, the value would equal to

= $510,000 ÷ $425,000

= $1.2

6 0
2 years ago
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