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
a 12oupon bond, semiannual payments, is callable in 3 years. the call price is $1,120; if the bond is selling today for $1,110,
charle [14.2K]

Based on the coupon rate, the call price and the selling price, the yield to call is 11.06%.

<h3>How is the yield to call found?</h3>

The formula to find it is:

= (Coupon + (Call price - Current price) / Number of periods ) / ( (Call price + Current price) / 2 ) x 2

Solving gives:

=( (12%/2  x 1,000) + (1,120 - 1,110) / 6 semi annual periods ) ) / ( (1,120 + 1,110) / 2) x 2

= (61.667 / 1,115) x 2

= 11.06%

Find out more on the yield to call at brainly.com/question/14801120.

#SPJ12

7 0
1 year ago
In a sweezy oligopoly, the profit-maximizing level of output occurs where:_____.
hodyreva [135]

In a Sweezy oligopoly, the profit-maximizing level of output occurs where mr=mc.

Paul M. Sweezy created the oligopoly's kinked demand curve in 1939. The model explains how oligopolistic groups behave rather than placing emphasis on how price-output determination occurs.

With an equilibrium output of Q units and an equilibrium price of P, the oligopolist maximizes profits by equating marginal income with marginal cost.

Due to each company's desire to maximize profits, there is frequently intense competition among them when it comes to pricing, production, and promotion.

The main distinction between a monopolist and a perfectly competitive firm is that although for a monopolist, marginal revenue is not equal to the price since changes in output quantity affect the price.

To learn more about monopolists refer to:

brainly.com/question/14055453

#SPJ4

7 0
2 years ago
Michael Co. is a corporation that sells breakfast bars. Based on the accounts listed below, what are Michael's total trade recei
Thepotemich [5.8K]

Answer:

B. $42,000

Explanation:

Trade receivables refers total amounts that customers of a company are owing the company for goods or services sold to them.

For Michael Co., this can be calculated as follows:

Michael's total trade receivables = 3-month note due from Michael's main customer + Due and unpaid from this month's sales + Due and unpaid from last month's sales

Therefore, we have:

Michael's total trade receivables = $12,000 + $19,000 + 11,000 = $42,000.

Therefore, Michael's total trade receivables is $42,000.

7 0
2 years ago
The 2017 financial statements of Meadowlark Corporation report that the company paid dividends of $21,825,000 to its preferred s
Fynjy0 [20]

Answer:

the correct answer is

(C) Dividend preference

good luck <3

7 0
2 years ago
Read 2 more answers
A blue ocean strategy differs from a low-cost strategy in that
Tju [1.3M]
The focus of a blue ocean strategy is on lowering the economic value created, whereas a cost-leader focuses on increasing the economic value created.
6 0
2 years ago
Other questions:
  • A cost associated with home buying would be:
    7·2 answers
  • Trade associations provide all of the following except
    12·1 answer
  • True or False: Contributions received in a prior period and restricted by the donor for construction of a building were reported
    5·1 answer
  • A remotely located air sampling station can be powered by solar cells or by running an electric line to the site and using conve
    13·1 answer
  • The Dow Jones Industrial Average is:
    13·2 answers
  • Kershaw Electric sold $6,000,000, 10%, 10-year bonds on January 1, 2019. The bonds were dated January 1, 2019, and paid interest
    12·1 answer
  • The challenges of promoting a new product are considered during the screening and evaluation stage of new product development.
    9·2 answers
  • Cora purchased a hotel building on May 17,.2018, for $3,000,000. Determine the cost recovery deduction for 2019.
    13·1 answer
  • You were hired as a consultant to the ABC Company, whose target capital structure is 35% debt, 10% preferred, and 55% common equ
    15·1 answer
  • Bonita Industries began using dollar-value LIFO for costing its inventory two years ago. The ending inventory for the past two y
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!