1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
pashok25 [27]
3 years ago
9

Consider the following information: Portfolio Expected Return Beta Risk-free 6 % 0 Market 10.2 1.0 A 8.2 1.4 a. Calculate the re

turn predicted by CAPM for a portfolio with a beta of 1.4. (Round your answer to 2 decimal places.) b. What is the alpha of portfolio A.
Business
1 answer:
Ganezh [65]3 years ago
7 0

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%

You might be interested in
Promoters of an LLC are Select one: a. are never personally liable on pre-formation debt. b. always liable on pre-formation debt
Bad White [126]

Answer:

The answer is C. only liable on pre-formation debt until a novation occurs.

Explanation:

The corporation and the third-party agree to release the promoter from liability and to substitute the corporation in place of the promoter as the party liable on the contract. May be express or implied.

5 0
3 years ago
On January 1, Hurley Corporation issues $500,000, 5-year, 12% bonds at 96 with interest payable on January 1. The entry on Janua
KonstantinChe [14]

Answer:

b. credit to Cash $60,000.

Explanation:

Given that:

Hurley Corporation issues the principal amount of $500,000

Time = 5 years

Rate = 12%  at 96  with interest payable on January 1

Discount on issue  =500000 × (1 - 0.96) = 20000

Annual discount  amortization= 20000/5 = 4000                  

Interest payable  = 500000× 12% =  60000

From the information given in the question; we can have a journal entry to determine the what the straight-line method will include.

So, let have a look at the table below:

Discount on issue                     20000                                      

Annual discount                        4000

amortization

                                                     Debit                            Credit

Interest expense                         64000

Discount on Bonds payable                                            4000

Interest payable                                                               60000

Now; The January 1 entries will now be as follows:

                                                    Debit                        Credit

Interest payable                           60,000

Cash                                                                                60,000

Thus; The entry on January 1 to record payment of bond interest assuming amortization of bond discount used the straight-line method will include a: <u>Credit to cash  $60,000</u>

3 0
3 years ago
Tim writes a note to his boss to apologize for an embarrassing typo in a recent publication. at the end of the message, he promi
lina2011 [118]
<span>Tim’s desire to demonstrate remorse for his sanctions as well as demonstrate his understanding of the consequences of his poor behavior. This promise is an example of Tim attempting to secure future employees within with his current organization. Tim is ultimately owning my up to a mistake like a true man.</span>
6 0
3 years ago
During November, the production department of a process operations system completed and transferred to finished goods 31,000 uni
Aleks [24]

Answer:

200,800 units

Explanation:

<u>Calculation of Equivalent units of Production of Conversion Costs</u>

Method : weighted-average method.

Completed and Transferred (181,000 × 100%)             = 181,000

Ending Work In Process (33,000 × 60%)                     =   19,800

Equivalent units of Production of Conversion Costs  = 200,800

6 0
3 years ago
Recently us dairies struggling to increase milk sale tried to change the way adults thought about chocolate milk the dairies wan
Paladinen [302]

Reposition how the consumers perceived chocolate milk.

8 0
3 years ago
Other questions:
  • Wood Carving Corporation manufactures three products. Because of a recent lack of skillled wood carvers, the corporation has had
    7·1 answer
  • Macy Corporation's relevant range of activity is 5100 units to 11,500 units. When it produces and sells 8300 units, its average
    7·1 answer
  • our uncle is about to retire, and he wants to buy an annuity that will provide him with $57,000 of income a year for 20 years, w
    10·1 answer
  • The money supply is $6,000,000, currency held by the public is $2,000,000 and the reserve-deposits ratio is 0.25. Find deposits,
    13·1 answer
  • A Subaru representative has a solid relationship with Phil, a satisfied customer. Phil loves Subaru and will not accept anything
    11·1 answer
  • A paper mill releases chemicals into a river. There is one town downstream that uses the water. For every unit of chemicals rele
    8·1 answer
  • Strong brand names: multiple choice 1 are easy to create. guarantee brand loyalty. guarantee product quality. act as a signal of
    15·1 answer
  • Assume that the risk-free rate is 6% and the market risk premium is 8%.
    9·1 answer
  • An experience that would be listed in the ""other experience"" category would include _____. a. military service b. awards earne
    11·1 answer
  • On july 1, book palace prepaid 12 months' fire insurance with coverage starting the following month. the adjusting entry on dece
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!