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NeX [460]
3 years ago
5

You own a portfolio that has a total value of $215,000 and it is invested in Stock D with a beta of .86 and Stock E with a beta

of 1.39. The beta of your portfolio is equal to the market beta. What is the dollar amount of your investment in Stock D?
Business
1 answer:
babunello [35]3 years ago
4 0

Answer:  BP = BD(WD) + BE(WE)

                   1 = 0.86(1-WE) + 1.39WE

                   1 = 0.86-0.86WE + 1.39WE

                   1 = 0.86 + 0.53WE

                 -0.53WE = -0.14

                  0.53WE  = 0.14

                         WE   = 0.14/0.53

                         WE   = 0.2641509434

                         WD = 1 - WE

                         WD = 1 - 0.2641509434

                         WD = 0.7358490566

The dollar amount of investment in stock D = 0.7358490566 x $215,000

                                                                         = $158,207.54

Explanation: The beta of the portfolio is 1, which corresponds to the beta of the market. The beta of the portfolio equals beta of each stock multiplied by the percentage of fund invested in each stock(weight). The weight of stock D is equal to 1 - weight of stock E. Therefore, we need to make weight of stock E the subject of the formula by solving the problem mathematically and collecting the like terms. The weight of stock E is 0.2641509434. The weight of stock E will be subtracted from 1 so as to obtain the weight of stock D, which is 0.7358490566. The dollar amount of stock D equal to $215,000 multiplied by 0.7358490566, which is $158,207.54.

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8 0
3 years ago
Jack is yelling at Samantha because she was late last week. Unfortunately, the whole office can hear. Now Samantha is not only u
lukranit [14]

Answer:

In this case, Jack's "human/interpersonal skills" failed. The skills that Jack is failing to use are important for "managers."

Explanation:

From the statement above, we can assume that Jack's position is superior to that of Samantha. He is, probably, the manager. However, he yelled at Samantha last week because she was late. In this case, Jack failed in his "human skills." This is also known as<em> "interpersonal skills,"</em> which is <u>a set of skills related to interacting effectively with other people.</u>

A manager with good interpersonal skills knows how to listen to his subordinates. In fact, he should be an <em>active listener,</em> which means he should be observant upon listening to other people's explanation. He should also provide advice or solve problems without yelling.

Thus, this explain the answers.

6 0
3 years ago
Sam Burke, CPA, finds a material error in his client's previously filed tax return and advises the client on how to correct it.
Anton [14]

Answer:

The answer is: C) Consider his continued association with the client.

Explanation:

The American Institute of Certified Public Accountants (AICPA) issues a professional conduct code that regulates their affiliates' activities. According to AICPA's Responsibilities and Public Interest principles, Sam should not continue to work with this client. Sam cannot maintain a professional conduct if he accepts that his client doesn't correct his prior mistakes. If those prior errors persist, then his job will be negatively affected and then it will his responsibility. Accounting is not something static that begins and ends in one period, past records affect present and future records.

5 0
3 years ago
According to lawrence and lorsch, the stability of an organization's environment determine(s) the degree of ____.
Paul [167]
<span>According to Lawrence and Lorsch, the stability of an organization's environment determine(s) the degree of differentiation or integration that is necessary. 

Lawrence and Lorsch developed the contingency theory which involves organizations and changes in the environment. They watch how organizations change and perform based on what is changing around them and then how they adapt to the change. 
For them, differentiation is defined as organization systems breaking into smaller subsystems. Integration is defined as how well the subsystems work together to complete the overall task of the organization. 
</span><span />
8 0
3 years ago
Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,450 monthly. The contract currently sells for $114
romanna [79]

Answer:

a. 1.27%

b. 15.24%

c. 16.35%

Explanation:

a. What is the monthly return on this investment vehicle?

The formula for the value of a Perpetuity is;

Value = Payment/ rate

Rate = Payment/ Value

Rate = 1,450/114,000

= 0.0127

= 1.27%

b. What is the APR?

APR is the annual rate. The above figure is the monthly rate.

APR = Monthly rate * 12

= 1.27 * 12

= 15.24%

c. What is the effective annual return?

Effective annual return = [1 + (APR/n)]^n – 1

n is the number of compounding periods which is 12 here for monthly compounding.

= [1 + (15.24%/12)]^12– 1

= 16.35%

5 0
3 years ago
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