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Damm [24]
3 years ago
5

You want to invest $50,000 in a portfolio with a beta of no more than 1.4 and an expected return of 12.4%. Bay Corp. has a beta

of 1.2 and an expected return of 11.2%, and City Inc. has a beta of 1.8 and an expected return of 14.8%. The risk-free rate is 4%. You can invest in Bay Corp. and City Inc. How much will you invest in each?
Business
1 answer:
IRISSAK [1]3 years ago
8 0

Answer:

Assume the weight to be invested in Bay Corp is x. That means (1 - x) will be the weight for City Inc. The expression for the expected return will be;

(x * 11.2%) + ( (1 - x) * 14.8%) = 12.4%

0.112x + 0.148 - 0.148x = 0.124

-0.036x = -0.024

x = 0.67

Portfolio beta is;

= 0.67 * 1.2 + ( 1 - 0.67) * 1.8

= 1.398 so beta condition is satisfied.

Amount in Bay Corp.;

= 0.67 * 50,000

= $33,500

Amount in City Inc.;

= 50,000 - 33,500

= $16,500

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Answer:

c. Decreases by 4.5%

Explanation:

Calculation for What is the percentage change in the PV

First step is to calculate the present value when r is 5%

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Second step is to calculate present value when r is 10%

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Last step is to calculate the percentage change in the PV

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Percentage change in the PV = - 4.55% (Decrease)

Therefore the Percentage change in the PV Decreases by 4.5%

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2 years ago
What is the first step the manager takes when a subordinate is having difficulty carrying out a delegated task?
Andrew [12]
The qualifications of the person regarding the task
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3 years ago
Your company sells a variety of NFL logo t-shirts for various teams for $15. Your rental cost of the silk-screening equipment is
Zina [86]

Answer:

The company should print the 3,000 units of Tennessee  as they will yield a gain for 3,000 dollars.

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Sport Tee faces a economie of scale their cost do not increase over time. Sport Tee should sale as many shirt as it possible can

8 0
3 years ago
Rex became a partner with a 30% interest in the partnership profits when he invested $200,000. In 2019, the partnership generate
avanturin [10]

Answer:

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The computation of the gross income for each year is shown below:

In 2019:

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After knowing the issue Jim should take appropriate steps to discard this practice from the organization.

Read more about organization on brainly:-

brainly.com/question/15628242

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4 0
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