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erma4kov [3.2K]
3 years ago
6

Consider the one-factor APT. The standard deviation of returns on a well-diversified portfolio is 18%. The standard deviation on

the factor portfolio is 16%. The beta of the well-diversified portfolio is approximately:_________
Consider the single-factor APT. Stocks A and B have expected returns of 15% and 18%, respectively. The risk-free rate of return is 6%. Stock B has a beta of 1.0. If arbitrage opportunities are ruled out, stock A has a beta of:__________
Business
1 answer:
Luden [163]3 years ago
5 0

Answer and Explanation:

The computation is shown below:

1. For Beta^2

= Standard Deviation of Well Diversified Portfolio^2 ÷ Standard Deviation of factor Portfolio^2

= (18%^2 ÷ 16%^2)^0.5

= 18 ÷ 16

= 1.125 or 1.13

And,

2. Expected Return = Risk free rate + Beta ×Factor

18% = 6% + 1 × F

F = 12%

The Beta of A is

= (15% -  6%) ÷ 12%

= 0.75

We simply applied the above formula so that the correct value could come

And, the same is to be considered

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When cisco systems inc. of san jose, california, and tata consultancy services of mumbai, india, entered into their __________,
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4 years ago
Company AA and Company BB have identical Assets, Revenues and Ebit. They are in the same line of business. Company AA has a Debt
saveliy_v [14]

Answer:  BB

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7 0
4 years ago
Castillo Company has a defined benefit pension plan. At the end of the reporting year, the following data were available: beginn
Luda [366]

Answer:

$23,000

Explanation:

Before recording the journal entry, first we have to determine the pension expense amount which is shown below:

Pension expense = service cost + interest cost - expected return on plan assets

= $18,000 + $5,000 - $10,000

= $13,000

Now the journal entry would be

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2.1: A debit is A : a decrease to an account. B : an entry on the left side of an account. C : an entry on the right side of an
Luba_88 [7]

Answer:

B : an entry on the left side of an account.

Explanation:

There are two terms i.e debit and credit.  

The accounts that reported as an expense, losses, assets are recorded in the left-hand side of an account as it contains the debit balance.

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