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2 years ago

Why does the market portfolio include all risky assets?

1 answer:

6 0

Under the CAPM, all investors hold the market portfolio because it is the optimal risky portfolio. Because it produces the highest attainable return for any given risk level, all rational investors will seek to be on the straight line tangent to the efficient set at the steepest point, which is the market portfolio. Branliest would be nice (:

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cost formula is expressed as follows: Y = $17PH + $760,000 where PH is defined as process hours. What budgeted dollar amount wou

VMariaS [17]

Answer:

B. $ 1,984,000 $ 2,112,000

Explanation:

Static budget is a budget that has been prepared for a standard level of output with no tendency to vary irrespective of the level of output.

Therefore, the figure that will appear in static budget is as follows:

Y = $16PH + $640,000 where PH is defined as process hours

PH = 84,000 (Budgeted output)

Y = $16(84,000) + $640,000

Y = $1,344,000 + $640,000

Y = $1,984,000

That is the figure that will appear in the static budget is $1,984,000

Flexible budget is a budget designed to vary with the level of actual activity.

Therefore the figure that will appear in the flexible budget is as follows:

Y = $16PH + $640,000 where PH is defined as process hours

PH = 92,000 (Budgeted output)

Y = $16(92,000) + $640,000

Y = $1,472,000 + $640,000

Y = $2,112,000

That is the figure that will appear in the flexible budget is $2,112,000

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2 years ago

44000 Assets and costs are proportional to sales. The company maintains a constant 30 percent dividend payout ratio and a consta

Minchanka [31]

Answer:

Maximum Dollar Increase = $10079.76

Explanation:

(See attachment for full question)

INCOME STATEMENT

Sales ---------- $67,000

Costs ---------- $43,800

EBIT ------------ $23,200

Taxes (34%) ----$7,888

Net income ------$15,312

BALANCE SHEET

Current Assets ------$31,000

Fixed Assets --------- $118,000

Total ------------------- $149,000

Long-term Debt -----$68,000

Equity ------------------- $81,000

Total ----------------- $149,000

Dividend Payout Ratio = 30%

Plowback Ratio is calculated by: 1 - Dividend Payout Ratio

Plowback Ratio = 1 - 30%

Plowback Ratio = 1 - 30/100

Plowback Ratio = 1 - 0.3

Plowback Ratio = 0.7

Plowback Ratio = 70/100

Plowback Ratio = 70%

Return on Equity (ROE) is calculated by: Net Income/Total Equity

Net Income = $15,132

Total Equity = $81,000

ROE = $15,132/$81,000

ROE = 0.186815

ROE = 18.68%

Calculating Sustainable Growth Rate (SGR)

SGR = (ROE * Plowback Ratio)/(1 - ROE * Plowback)

SGR = (0.186815 * 0.7)/( 1 - 0.186815 * 0.7)

SGR = (0.1307705)(1-0.1307705)

SGR = 0.1307705/0.8692295

SGR = 0.150444157728194

SGR = 0.1504

Max increase = (Sales * SGR)= ($67,000 * 0.1504)

Max Increase = $10079.75856778905

Max Increase = $10079.76

7 0

3 years ago

Granite State Airlines serves the route between New York and Portsmouth, NH, with a single-flight-daily 100-seat aircraft. The o

TEA [102]

Answer:

Given data: One flight with total seats = 100

Full fare passengers, cost per ticket=$150, mean=56 passengers, SD=23

Discount fare passengers, cost per ticket=$100, mean=88 passengers, SD=44

(a) Here, though there is a hint to use the CDF, since the confidence interval is not given we will make some simplying assumptions that will reduce the complexity of the question, of course keeping the question statistically correct.

this question wants us to maximize total revenue per flight (one way), we can do that by taking only full fare passengers or total revenue will be 150*100=$15,000, but since historical probability shows a mean of 56 with a standard deviation of 23, we can assume in best case scenario total full fare ticket passengers will be 56+23=79, leaving 21 tickets for discount passenger, in this case the total revenues will be 79*150+21*100=$13,950

(b) Now, the new constrained policy is giving a clear cut number of seats to each category of pasengers, 44 for discount (total revenues 44*100) and 56 for full fare (total revenues 56*150) both of which are within the probabilities given earlier (full fare mean=56, discount mean=88). Total revenues in case will be 44*100+56*150=$12,800.

(c) Gain is the difference of the excess revenues in both cases of optimal total revenues and limited seats policy or answer (a) - answer (b) = $13,950- $12,800=$1,150

(d) Realistically speaking, there is no answer for this question without a clear cut confidence interval. Another simplifying assumption we can make here is taking the mean passengers as expected bookings (can be tweaked once confidence interval or degree of significance is given). so total revenues in this case will be 44*100 from discount and 56*150 from full fare passengers. That is still similar to answer (c) due to our assumption/lack of constraints, so our optimal booking will be 54 full fare tickets and 44 discount passenger tickets. You can also take worst case scenario by subtracting SD of each passenger type from the mean or go the best case scenario in which SD of full fare will be added to the mean while the pending seats (left over from 100) will be the total to discount fare for optimal revenue collection.

6 0

3 years ago

Read 2 more answers

A company purchased $3,600 worth of merchandise. transportation costs were an additional $315. the company later returned $250 w

Anestetic [448]

Answer: $3,564.50

Explanation:

The total amount that the company will pay for the merchandise is the net cost of the merchandise, less a 3% cash discount, plus the transportation costs. The cash discount normally only applies to the merchandise and not the transportation costs.

The cost of the merchandise is $3,600 less the $250 refund, which equals $3,350. With a 3% cash discount they will pay 97% of this amount, which is $3,249.50. After adding the additional transportation charge of $315, the total amount to be paid is $3,564.50.

6 0

3 years ago

GoSnow sells snowboards. Each snowboard requires direct materials of $128, direct labor of $53, and variable overhead of $63. Th

Fofino [41]

Answer:

Unitary selling price= $304.93

Explanation:

Giving the following information:

Unitary variable costs:

direct materials of $128

direct labor of $53

the variable overhead of $63.

Fixed costs:

The fixed overhead costs of $301,000

Fixed selling and administrative costs of $229,000

The company has a target profit of $189,800.

Units sold= 11,800 snowboards

First, we need to calculate the total contribution margin required:

Contribution margin= net profit + total fixed expense

Contribution margin= 189,000 + (301,000 + 229,000)

Contribution margin= $719,000

Now, we calculate the total variable expense:

Total variable cost= 11,800* (128 + 53 + 63)

TVC= 2,879,200

Finally, we calculate total sales and the unitary selling price:

Total sales= contribution margin + total variable cost

Total sales= 719,000 + 2,879,200= 3,598,200

Unitary selling price= 3,598,200/11,800= $304.93

6 0

3 years ago