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quester [9]
3 years ago
15

A portfolio is composed of two securities, Stock X and Stock Z. Stock X has a standard deviation of returns of 35%, while Stock

Z has a standard deviation of returns of 15%. The correlation coefficient between the returns on X and Z is .25. If Stock X comprises 40% of the portfolio, while Stock Z comprises 60% of the portfolio, what is the standard deviation of this two-risky-asset portfolio
Business
1 answer:
emmainna [20.7K]3 years ago
8 0

Answer:

Portfolio SD = 0.18439 or 18.439%

Explanation:

The standard deviation of a stock or a portfolio is the measure of the total risk contained in the stock or portfolio. Risk can be defined as the volatility of the stock returns. To calculate the standard deviation of a two stock portfolio, we use the attached formula.

If the weight of stock x is 40%, the weight of stock y will be 1 - 40% = 60%

SD = √(0.4)^2 * (0.35)^2 + (0.6)^2 * (0.15)^2 + 2 * 0.4 * 0.6 * 0.25 * 0.35 * 0.15

SD = 0.18439 or 18.439%

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You have to cross a broad river with a swift running current. Your options to cross are to swim, walk across an existing bridge,
ruslelena [56]

The risk management principle involved in this is decision making.

<u>Explanation:</u>

The processes and the activities that we perform have some risks involved in them. The intensity of risk might differ from one task to the other task. So the risk involved in these tasks and the activities must be managed properly so that the target can be achieved properly.

These are some principles involved in the management of the risk. The principle involved in the task given in the question is that of making a decision which serves the purpose best and helps you to achieve your target. The decision made to cross the river via the bridge is taken after keeping into mind a lot of factors and the decision taken should minimize the risks. Thus it is the principle of the decision making.

7 0
3 years ago
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Johnson &amp; Johnson has a reputation for being a company with high levels of corporate social responsibility to all of its sta
Lera25 [3.4K]

1. Organizations have the knowledge and resources to do good in the community, so they are responsible for helping others.

Explanation:

<u>Companies that exist for the sake of making profits are prone to do it at the expense of other social and economic structures</u>. Thus, social responsibility is an important part of running a big firm with massive resources that can be put to this use.

Companies have think tanks, monitory and administrative advantages to do Social work that many organisations simply can't and if they do it,<u> it produces greater trust among the public and clientele too, along with a loyal worker base too.</u>

3 0
3 years ago
Total stockholders' equity represents :
Ganezh [65]

Answer:

c. a claim against a portion of the total assets of an enterprise.

Explanation:

The statement of stockholder's equity comprises common stock, preferred stock, and retained earnings.  

The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid

And, the ending balance of the common stock = Beginning balance of common stock + issued shares  

In this the accounting equation is used which is shown below:  

Total assets = Total liabilities + stockholder equity  

The debit and credit side of the balance sheet should always be equal and balanced. So, its claims against the portion of the total assets

5 0
3 years ago
At December 31, 2021, Moonlight Bay Resorts had the following deferred income tax items: Deferred tax asset of $62 million relat
o-na [289]

Answer:

Moon light Bay Resorts would report in the balance sheet December 31, 2021 ; non current deferred tax asset of $102 million and non current deferred tax liability of $208 million .

Explanation:

From the above question, we are to determine if Moon Light Bay Resorts should report as assets (Current or non current) or liabilities (Current or non current) in its balance sheet as at 31st December, 2021.

The items are also classified in the balance sheet as seen below;

Total deferred tax liability ($128 million + $80 million) = $208 million

(Deferred tax liabilities related to both current or non current assets)

Total deferred tax asset ($62 million + $40 million) = $102 million

The net deferred tax liability = $106 million ($200 million - $102 million)

5 0
3 years ago
A company in Mexico recently agreed to trade coal to an American importer in return for American-made cars. This arrangement is
Alex777 [14]

Answer:

barter

Explanation:

Barter system -

In this type of system , there us exchange of goods and commodities , without the use of any monetary value like money , is referred to as barter system .

When money system was not introduced , barter system was used , where people used to exchange the goods depending on the needs of each other .

Barter system is based on the bilateral basis.

Hence , from the given scenario of the question,

The correct term is barter.

6 0
3 years ago
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