Answer: forces banks with greater risk to maintain more capital.
Explanation:
The Basel Accord are a set of regulations in the banking industry that enables the proper functioning of banks, if these regulations for banks are strictly adhered to, banks would rarely have problems of total failure which leads to the bank closing up.
The Basel Accord is named after the city of Basel in Switzerland where the meetings took place, the Accord majored on the minimum financial requirements of banks.
Answer:
a. The return predicted by CAPM for a portfolio with a beta of 1.4 is 11.88%
b. The alpha of portfolio A is -3.68%
Explanation:
The formula for computing the return by Capital Assets Pricing Method (CAPM) model.
Expected return = Risk Free rate + (Beta × Market Risk Premium)
where,
Market risk premium = market return - risk free rate
Now, putting the values in the above equation
a. Expected return = 0.06 + 1.4 × (0.102 - 0.06)
= 0.06 + 1.4 × 0.042
= 0.06 + 0.0588
= 0.1188
= 11.88 %
Thus, the return predicted by CAPM for a portfolio with a beta of 1.4 is 11.88%.
b. The alpha should be = Portfolio expected return - expected return
= 8.20 - 11.88 %
= -3.68%
Thus, the alpha of portfolio A is -3.68%
Answer:
2 transactions reduced ABC's total assets
Explanation:
First transaction that reduced ABC's total assets was the purchase of of equipment worth $1,200 for cash.This transaction drains cash to the tune of $1,200 since it was settled by a cash outflow of $1,200
The second transaction that negatively the business's total assets was the payment of salaries to employees to the tune of $10,000, this also was a cash outflow of $10,000 from the business .
The issue of shares increased the total assets since it was cash inflow.
The purchase of land implies an increase in asset land and an increase in liabilities notes payable.
The receipt of $14,000 cash increases total assets.
The purchase of office supplies on account did not reduce assets but increases it.
