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riadik2000 [5.3K]
3 years ago
7

A stock is expected to return 8% in a normal economy, 12% if the economy booms, and lose 3% if the economy moves into a recessio

nary period. Economists predict a 56% chance of a normal economy, a 25% chance of a boom, and a 19% chance of a recession. The expected return on the stock is __%.
Business
1 answer:
JulijaS [17]3 years ago
8 0

Answer: 6.91%

Explanation:

Expected return = Sum of (Probability of state of economy * Return given state of economy)

= (56% * 8%) + (12% * 25%) + (19% * -3%)

= 4.48% + 3% - 0.57%

= 6.91%

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Suppose the own price elasticity of demand for good X is -3, its income elasticity is -2, its advertising elasticity is 4, and t
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Answer:

a. 21 percent

b. -20 percent

c. -8 percent

d. -8 percent

Explanation:

Own price elasticity = -3

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Cross price elasticity = -2

Formula for elasticity is given by,

Elasticity = \frac{Percentage change in Quantity}{Percentage change in factor}

a. When price of good X decreases by 7 percent.

Elasticity = \frac{Percent change in quantity}{Percent change in own price}

-3 = \frac{Percent change in quantity}{-7}

Percent change in quantity = (-3) * (-7)  = 21

Thus, as price decreases by 7% quantity rises by 21%.

b. The price of good Y increases by 10 percent.

Corss- price elasticity = \frac{Percent change in quantity}{Percent change in Price of good Y} \\  -2     = \frac{Percent change in quantity }{10} \\Percent change in quantity = (-2) * (10) \\                                              = -20

Thus, as price of good Y increases by 10 percent, demand for good X falls by 20 percent.

c. Advertising decreases by 2 percent.

Elasticity = \frac{Percent change in quantity}{Percent change in advertising} \\4    = \frac{Percent change in quantity }{-2} \\Percent change in quantity = (-2) * (4) \\                                               = -8

Thus, a 2 percent decline in advertising will lead to a 8 percent fall in quantity of good X.

d. Income increases by 4 percent.

Income elasticity = \frac{Percent change in quantity }{Percent change in income}\\-2 = \frac{Percent change in quantity}{4} \\Percent change in quantity = (-2) * (4) \\                                               = -8\\

Thus, when income increases by 4 percent, quantity decreases by 8 percent.

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Fortune Drilling Company acquires a mineral deposit at a cost of $5,900,000. It incurs additional costs of $600,000 to access th
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Answer and Explanation:

the journal entry is given below:

Depletion Expense $1,358,500

         To Accumulated Depletion $1,358,500.

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