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DanielleElmas [232]
3 years ago
5

Suppose stocks offer an expected rate of returns of 10% with a standard deviation of 20%, and gold offers an expected return of

5% with a standard deviation of 25%. (i) If the correlation between gold and stocks is sufficiently low, gold ______ be held as a component in the optimal portfolio. (ii) If the correlation coefficient between gold and stocks is 1.0, then gold ______ be held as a component in the optimal portfolio.
Business
1 answer:
FinnZ [79.3K]3 years ago
4 0

Answer: A)  (i) will; (ii) will not

Explanation:

The optimal portfolio should be one where the assets are diversified such that returns can be made regardless of the direction the economy is going. For this to happen, asset classes need to have a low correlation with one another.

If the correlation between gold and stocks is low therefore, gold should and will be held as a component in the portfolio. If the correlation between gold and stocks is 1.0 - this means that they are perfectly correlated and move together - gold should not be in the optimal portfolio as it would be too risky.

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Schell Company manufactures automobile floor mats. It currently has two product lines, the Standard and the Deluxe. Schell has a
kenny6666 [7]

Answer:

Instructions are below.

Explanation:

Giving the following information:

Schell has a total of $39,060 in overhead.

Direct labor hours:

Standard= 400

Deluxe= 200

Machine hours:

Standard= 4,150

Deluxe= 3,000

To calculate the estimated manufacturing overhead rate we need to use the following formula:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

1) Direct labor hours as allocation rate

Estimated manufacturing overhead rate= 39,060/600= $65.1 per direct labor hour

Now, we can allocate to each product line:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Standard= 65.1*400= $26,040

Deluxe= 65.1*200= $13,020

2) Machine hour as allocation rate:

Estimated manufacturing overhead rate= 39,060/7,150= $5.46 per machine hour

Now, we can allocate to each product line:

Standard= 5.46* 4,150= $22,659

Deluxe= 5.46*3,000= $16,380

7 0
3 years ago
epper Department store allocates its service department expenses to its various operating (sales) departments. The following dat
ad-work [718]

Answer:

Pepper Department Store

The total advertising expense allocated to Department B is:

= $24,000.

Explanation:

a) Data and Calculations:

Expense            Basis for allocation               Amount

Rent                   Square feet of floor space $ 49,000

Advertising        Amount of dollar sales      $ 80,000

Administrative   Number of employees     $ 120,000

Department   Square Feet   Dollar Sales   Number of employees

A                         5,500            $ 355,000              31

B                         5,900            $ 375,000              33

C                         6,100            $ 520,000              35

Totals               17,500          $ 1,250,000              99

Advertising Expense Allocation:

Department A = $22,720 (355,000/$1,250,000 * $80,000)

Department B = $24,000 ($375,000/$1,250,000 * $80,000)

Department C = $33,280 ($520,000/$1,250,000 * $80,000)

6 0
3 years ago
Which of the skills are the most essential to be a successful leader? reading skills teamwork skills writing skills note-taking
Zolol [24]
I would say teamwork skills.
8 0
3 years ago
Accelerated Finance is deciding whether to purchase new accounting software. The cost of the software package is $ 67 comma 000​
sammy [17]

Answer:

The answer is: Expected annual net cash savings are $16,750.

Explanation:

Please find the below for detailed explanations and calculations:

Payback period is defined as the time it takes an investment to recover its initial investment.

In this case, the initial investment is the cost of software package at $67,000, while the payback period is four years.

We apply the payback period formula to calculate payback period to calculate the Expected annual net cash savings:

Payback period = Initial investment / Net cash flow per period <=> Net cash flow per period = Initial investment / payback period = 67,000 / 4 = $16,750.

So, Net cash savings annually is expected at $16,750. In other words, if the firm is to save $16,750 per year from owning the software, it will take the firm 04 years to recover its initial investment.

3 0
3 years ago
The primary objectives of control over inventory are
Morgarella [4.7K]

Answer: The correct answer is to safeguard the inventory and reporting the inventory on the financial statements.

Explanation: One of the primary objectives of control over inventory is to safeguard the inventory from damage or theft. The second objective is to report the inventory on the financial statements.

4 0
3 years ago
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