All categories

4 years ago

The market for insurance is one example of reducing risk by using diversification.

Business

1 answer:

Maurinko [17]4 years ago

4 0

The correct answer for this question is a. True. Hope this helps you fulfill your desires.

You might be interested in

If real gdp in a particular year is $80 billion and nominal gdp is $240 billion, the gdp price index for that year is:

Alex787 [66]

The gdp price index for that year is 300.
This is how we calculate this;
Gdp price index = 100 x nominal gdp / real gdp
=100 x 240 / 80
=24000/80
Gdp price index = 300

5 0

3 years ago

Donors give because they expect something in return.Give reasons why they donate

Komok [63]

They want to donate cause they want to help people who needs help.

7 0

3 years ago

What factors are important in predicting change in price?

OLEGan [10]

Demand for the product,the season the product is in or if its outdated

4 0

3 years ago

A common stock pays an annual dividend per share of $1.80. The risk-free rate is 5%, and the risk premium for this stock is 4%.

ArbitrLikvidat [17]

Answer:

The value of the stock today is $20

Explanation:

Using the CAPM equation, we first calculate the required rate of retunr on the stock.

The equation for CAPM is,

r = rRF + Beta * rpM

Where,

rRF is the risk free rate
rpM is the risk premium on market
Beta * rpM is the risk premium on stock

r = 0.05 + 0.04

r = 0.09 or 9%

The value of the stock can be calculated using the zero growth model of DDM. The DDM values the stock based on the present value of the expected future dividends from the stock. As the dividend from the stock is expected to remain constant through out to an indefinite period, the value of the stock today is,

P0 = Dividend / r

P0 = 1.8 / 0.09

P0 = $20

3 0

3 years ago

Your neighbor Bob has two annuities. The first annuity will pay him $10,000 per month for the next 10 years. The second annuity

german

Answer:

$1,643,344.308

Explanation:

These are Ordinary annuities because if it is not mentioned that the payments are made at the beginning of the year which is the case for Annuity Due.

You can use a financial calculator to find the Present value of these two ordinary annuities.

PV of Annuity 1 from (yr1-yr10)

Recurring payment; PMT = 10,000

Total duration ; N = 10 *12 = 120 months

Monthly interest rate in this case ; I/Y = 6%/12 = 0.50%

Future value ; FV = 0 (use 0 if annuity variable is not given )

then CPT PV= $900,734.533

PV of Annuity 1 from (yr11-yr20)

This will happen in 2 steps sice it is a forward-starting annuity;

Recurring payment; PMT = 15,000

Total duration ; N = 10 *12 = 120 months

Monthly interest rate in this case ; I/Y = 6%/12 = 0.50%

Future value ; FV = 0 (use 0 if annuity variable is not given )

then CPT PV( at t=10)= $1,351,101.80

Next find the PV of $1,351,101.80 at t=0;

$1,351,101.80 /(1.005^120) = $742,609.7754

Next, find the sum of these two PVs to find the answer;

=$900,734.533 + $742,609.7754

PV = $1,643,344.308

6 0

4 years ago