Answer:
A. the portion of the investment opportunity set that lies above the global minimum variance portfolio.
Explanation:
The Efficient frontier refers to the portfolios set that involves that expected return whose return is high at the level of minimum risk so the asset that contains the high risk profile that investment opportunity set portion should be above the variance portfolio i.e. minimum globally
Therefore the correct option is a.
Answer: Option (a) is correct.
Explanation:
Correct Option: Panel data.
Panel data is a combination of cross sectional data and time series data. Panel data is mostly used for the regression analysis. In this type of data, one can observe multiple instances or scenarios at more than one time frame.
The information provided by this type of data can be categorized into parts:
(i) Cross-sectional Information
(ii) Time series Information
Answer:
A) Contra to the particular asset.
Explanation:
A valuation allowance account is a reserve or contra account against deferred tax assets based on the likelihood that those assets will not be realized.
For example, a common valuation allowance account is Allowance for Doubtful Accounts which is a contra asset account of Accounts Receviable.
Answer:
rE = 0.104 or 10.4%
Explanation:
The WACC or weighted average cost of capital is the cost of a firm's capital structure. The capital structure can consist of one or more of the following components namely debt, preferred stock and common equity. The WACC is calculated as follows,
WACC = wD * rD * (1 - tax rate) + wP * rP + wE * rE
Where,
- w represents the weight of each component
- r represents the cost of each component
- D, P and E represents debt, preferred stock and common equity
- rD * (1 - tax rate) is the after tax cost of debt
plugging in the available values for wD, wE, tax rate, rD and WACC in the formula above, we can calculate the cost of common equity to be,
0.096 = 0.4 * 0.12 * (1 - 0.3) + 0.6 * rE
0.096 = 0.0336 + 0.6 * rE
0.096 - 0.0336 = 0.6 * rE
0.0624 / 0.6 = rE
rE = 0.104 or 10.4%
