Answer and Explanation:
Given:
For portfolio A
Expected return of 12%
beta = 0.5
Risk premium for A = ?
For portfolio B
Expected return of 13%
beta = 0.4
Risk premium for B = ?
Risk-free rate of return = 5%
Computation:
For portfolio A
12% = 5% + (0.5 × risk premium for A)
risk premium for A = 14%
For portfolio B
13% = 5% + (0.4 × risk premium for B)
risk premium for B = 20%
short position "A"
Long position "B"
Answer:
We can assume companies form country A export to country B. Country B's economy is very large and many domestic and foreign firms compete in it. High levels of competition will eventually lower the costs of products sold in a market, so the products sold in Country B have relatively low prices.
In order for foreign companies to compete in country B's market they must have low prices. So companies from country A will sell its products in country B at low prices, increasing the possibility that the price of their exports are lower than their domestic prices (prices for their own country). Therefore the chance for a dumping accusation increases.
Answer:
B. Cash 1,300 Dr, Accounts Receivable 1,200 Dr, Consulting Revenue 2,500 Cr
Explanation:
Kincaid Company
Journal Entry
Date Description Debit Credit
Cash $1,300
<em>Accounts Receivable $1,200</em>
Consulting Revenue $2,500
