Ask question

Ask question

All categories

3 years ago

11

If we compare the betas of various investment opportunities, why do the assets that have higher betas also have higher average e

xpected rates of return

1 answer:

tester [92]3 years ago

6 0

Answer:

Because they are more riskier and have higher rates of return.

Explanation:

You might be interested in

You purchase one MMM July 129 call contract (equaling 100 shares) for a premium of $21. You hold the option until the expiration

mel-nik [20]

Answer:

There is loss of $900 on investment.

Explanation:

The purchase of 1 MMM July 129 call contract at premium = $21

Since it is given that it is held unit the expiration date.

The selling price of MMM stock = $141 per share.

Total number of shares = 100

Total amount paid for share (purchase price) = 129 + 21 = $150

Loss or profit = Market price on expiration date- purchase price

=141-150

= - 9

Total loss = 9 × 100

=900 loss

7 0

3 years ago

GMM co. plans to issue annual coupon bonds with 7.5% coupon rate to the public, maturing in 10 years. The face value of the bond

SOVA2 [1]

Answer:

What is the fair price for the new 10-year annual coupon bond?

b. 924.70

Explanation:

First it's needed to calculate the YTM of the current bonds, issued 2 years ago, if we applied the Present Value formula to the Principal and Coupons we get the YTM to the current bonds.

With a market price of $950, we can find the YTM of these bonds today, when there are 13 years left until the expiration date, the YTM is 8,66%.

If we apply this 8,66% rate to the new bond issue, we can obtain the price that could be accepted for the market.

Bond Value

Principal Present Value = F / (1 + r)^t

Coupon Present Value = C x [1 - 1/(1 +r)^t] / r

YTM of the Bond that was issued 2 years ago.

The price of this bond it's $340 + $610 = $950

Present Value of Bonds $340 = $1,000/(1+0,0866)^13

Present Value of Coupons $610 = $80 (Coupon) x 7,63

7,63 = [1 - 1/(1+0,0866)^13 ]/ 0,0866

The bond price to be issued:

The price of this bond it's $436 + $489 = $924,70

Present Value of Bonds $436 = $1,000/(1+0,0866)^10

Present Value of Coupons $489 = $75 (Coupon) x 6,52

6,52 = [1 - 1/(1+0,0866)^10 ]/ 0,0866

7 0

3 years ago

Suppose that in the rice market demand shifts greatly due to a new rice diet that is being marketed heavily in the U.S. as a cur

shepuryov [24]

Answer:

the equilibrium price increases, albeit by a negligible amount

Explanation:

Here are the options to this question :

the supply curve will shift again after demand meets supply

the equilibrium price increases

the equilibrium price increases, albeit by a negligible amount

the demand curve will shift back to its original level

The new rice diet that is being marketed heavily in the U.S. as a cure for cancer would increase the demand for rice. This would shift the demand curve rightward. This shift of the demand curve would increase demand and price

The hw healthy rainy season that positively affects the rice crop in California woild increase the supply of rice and as a result the supply curve would shift to the right. The rightward shift of the supply curve would cause quantity to rise and price to fall.

This combined effect would lead to a rise in quantity and a rise in price by only a negligible amount.

I hope my answer helps you

5 0

3 years ago

Crinkle Cut Clothes Company manufactures two products CC1 and CC2. Current direct material and direct labor costs are detailed b

nordsb [41]

Answer:

The correct answer is D.

Explanation:

Giving the following information:

Next year's overhead is estimated to be $338,250.

Direct labor costs $28 per hour and the company expects to manufacture 22,000 units of CC1 and 91,000 units of CC2 next year.

CC1: Direct Labor Dollars Per Unit $22.40

CC2: Direct Labor Dollars Per Unit $15.40

First, we need to calculate the number of direct labor hours required:

CC1= 22.4/28= 0.8 direct labor hours per unit

CC2= 15.4/28= 0.55 direct labor hours per unit

CC1= 22,000 units* 0.8= 17,600 hours

CC2= 91,000* 0.55= 50,050 hours

Total= 67,650 hours

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 338,250/ 67,650= %5 per direct labor hour

4 0

2 years ago

Through ________, many companies today are strengthening their connections to all partners, from providers of raw materials to c

Yakvenalex [24]

Answer:

supply chain management is the accurate answer, but due to the option provided i'll go for 4. Partnership relationship marketing

Explanation:

4 0

3 years ago