Answer:
The Expected return of the Portfolio is 8.05% and the standard deviation is 7%
Explanation:
The computation is shown below:
Given that
T-bill rate or risk-free rate = 5.20%
The Expected Risk premium of fund = 11.40%
As we know that
Expected Return of Equity = Risk premium + Risk free rate
= 11.4%+5.2%
= 16.60%
Now
Weight of equity fund is
= $50,000 ÷ ($50,000 + $150,000)
= 0.25
And,
Weight of T-bills is
= $150,000 ÷ ($50,000 + $150,000)
= 0.75
Also the correlation between risk free and the fund would always be zero
The Standard deviation of Equity fund= 28%
ANd, the Standard deviation of T-bills= 0
Now
Expected return Portfolio = (weight of fund × expected return) + (weight of risk free × rate of return)
= (0.25 × 16.60%) + (0.75 × 5.2%)
= 8.05%
And,
The standard deviation of the portfolio (σp) is
= √(wA × standard deviation of A )^2 + (wB × standard deviation of B ) ^2 + (2 × wA × wB × standard deviation of A ×standard deviation of A × rBM)
= √((0.25 × 28%)^2 + (0.75 × 0%)^2 + (2 × 0.25 × 0.75 × 28% × 0% × 0))
= 7.00%
Hence, the Expected return of the Portfolio is 8.05% and the standard deviation is 7%
The smaller the number of good substitutes for a product, the greater will be the price elasticity of demand for it. True or False True False
Answer:
False.
Explanation:
A price elasticity of demand can be defined as a measure of the responsiveness of the quantity of a product demanded with respect to a change in price of the product, all things being equal.
Mathematically, the price elasticity of demand is given by the formula;
[tex] Price \; elasticity \; of \; demand = \frac {percent \; change \; in \; quantity \; demanded}{percent \; change \; in \; price}[/tex]
The demand for goods is said to be elastic, when the quantity of goods demanded by consumers with respect to change in price is very large. Thus, the more easily a consumer can switch to a substitute product in relation to change in price, the greater the elasticity of demand.
A substitute product can be defined as a product that a consumer sees as an alternative to another product and as such would offer similar benefits or satisfaction to the consumer.
Generally, consumers would like to be buy a product as its price falls or become inexpensive.
Hence, the smaller the number of good substitutes for a product, the lesser will be the price elasticity of demand for it.
For substitute products (goods), the price elasticity of demand is always positive because the demand of a product increases when the price of its close substitute (alternative) increases.
Which of these loan options is strongly recommended for first-time buyers? Choose all that apply. Adjustable-rate Contract for deed Balloon Fixed-rate Interest-only
Answer:
Fixed-rate
Explanation:
Fixed-rate loans and mortages are those that have a specific interest rate, and a specific payment that will not ever change over the duration of the loan because both are fixed. In other words, a fixed-rate loan is simply a annuity payment over a particular period of time.
For first-time buyers this is the easiest option because it is simple, it can be easily projected over time, and helps with financial planning.
You would like to have enough money saved to receive $150,000 per year perpetuity after retirement so that you and your family can lead a good life. How much would you need to save in your retirement fund to achieve this goal
Answer:
$2,500,000
Explanation:
The computation of the saving amount is shown below
The Present value of a perpetuity is
= Annual cash flows ÷ interest rate
= $150,000 ÷ 0.06
= $2,500,000
By dividing the annual cash flows from the rate of interest we can get the present value of a perpetuity and the same is to be considered
We simply applied the above formula so that the correct value could come
The amount you would need to save in your retirement fund to achieve this goal is $2,500,000.
Present value:Using this formula
Present value =Annual cash flows per year ÷ Interest rate
Where:
Annual cash flows per year=$150,000
Interest rate=10% or 0.10
Let plug in the formula
Annual cash flows per year = $150,000 ÷ 0.06
Annual cash flows per year = $2,500,000
Inconclusion the amount you would need to save in your retirement fund to achieve this goal is $2,500,000.
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What is the name of the independent federal agency that is designed to monitor and regulate the country's credit unions
Answer:
The National Credit Union Administration
Explanation:
The National Credit Union Administration is an independent federal agency that supports and regulates federal credit unions and their customers in the United States.
When interest rates are fixed, rises in the rate of inflation tend to penalize ________ of financial capital, while _________ of financial capital end up better off.
Answer: b. suppliers; demanders
Explanation:
When interest rates are fixed, rises in the rate of inflation tend to penalize suppliers of financial capital, while demanders of financial capital end up better off.
When inflation rates rise, the value of the currency i.e. the dollar, is eroded which means that it can only buy less or pay for less than it used to.
If interest rates are fixed, the interest payments are fixed which means that when the suppliers of the capital are paid back in a rising inflation environment, they get less dollars back which means that they are worse off.
The demanders of the capital however, will be effectively paying back less than they are supposed to pay so they will be better off.
Todd Foley is applying for a $240,000 mortgage. He can select either a $1,680 monthly payment with no points or a $1,512 payment with 4 points. How many months will it take Todd to cover the cost of the discount points if he takes the lower monthly payment
Answer:
57 months
Explanation:
Calculation of number of lower monthly payment
Number of months = Percentage discount Points * Principal / Higher amount without point - Lower amounts with point
Number of months = $240,000 * 0.04 / $1,680 - $1,512
Number of months = $9600 / $168
Number of months = 57.14285714285714
Number of months = 57 months
Hence, it will take 57 months to cover the cost of the discount points if he take lower monthly payments .
Greg Noronha has been told the expected return on Merchants Bank is 7.00%, He knows the risk-free rate is 2.10%, the market risk premium is 6.45%, and Merchants' beta is 0.78. Based on the Capital Asset Pricing Model, Merchants Bank is:
Answer:
Merchants Bank is overvalued
Explanation:
In the first, we need to determine the required rate of return on Merchant Bank stock using the Capital Asset Pricing Model formula for the required rate of return found below:
The required rate of return=risk-free rate+beta*market risk premium
risk-free rate=2.10%
beta=0.78
market risk premium=6.45%
The required rate of return=2.10%+(0.78*6.45%)
the required rate of return=7.13%
Since the expected return(discount rate) used in valuing Merchant Bank is lower viz-a-viz the required rate of return of 7.13%, the stock is said to overvalued
In order to be fully rested before Angel’s big History test, she should get at least________hours of sleep.
a.
8
c.
9
b.
7
d.
10
Please select the best answer from the choices provided
A
B
C
D
Answer:
B. 7 hours
Explanation:
right on edg
Answer: B. 7 hours
Explanation: On Edge!
In the long run, if the marginal product of capital equals the real interest rate, investment is given by: g
Answer:
Investment equals savings.
Explanation:
Marginal product of capital is the real rental price of the capital. It is equal to the real interest rate if the law of diminishing returns is prevailing in the economic system. In such case the investments will be equal to savings. If the real interest rate is increased by the marginal product of capital then depreciation rate and risk premium accounts for the difference.
Suppose that country A has higher real income per capita than country B. Explain why this does not imply that most citizens of country A have higher real income than most citizens of country B.
A. A high degree of income inequality in country A may result in most of its citizens having incomes below the average income of country B.
B. The higher per capita income in country A could be the result of most citizens there having country B unearned income.
C. Most citizens in country B may be employed, while the majority of those in country A may not work.
D. All of the above are plausible.
Answer:
A. A high degree of income inequality in country A may result in most of its citizens having incomes below the average income of country B.
Explanation:
Real per capita income is an average of the incomes earned by the citizens of a country. It is used to gauge the standard of living in a country.
However in the given scenario country A has a higher real income per capita but a lower real income than country B.
This can be explained by a disparity in income of citizens in country A. If some people are very rich and others are very poor, an average may give large per capita income.
While in country B if there is income equality the personal income of each individual will be high.
Suppose you have a project that has a 0.5 chance of tripling your investment in a year and a 0.5 chance of doubling your investment in a year. What is the standard deviation of the rate of return on this investment?
Answer:
50%
Explanation:
Suppose the return form tripling = 300%
Suppose the return form doubling = 200%
Probability Return Calculation Expected return
0.50 300% 150% (0.50*300%) 150%
0.50 200% 100% (0.50*200%) 100%
Expected return 250%
Standard deviation = [tex]\sqrt{P1*(Rt - E(R))^2 + Pd*(Rd - E(R))^2}[/tex]
Standard deviation = [tex]\sqrt{0.50 * (300% - 250%)^2 + 0.50*(200% - 250%)^2}[/tex]
Standard deviation = [tex]\sqrt{1250% + 1250%}[/tex]
Standard deviation = [tex]\sqrt{2500%}[/tex]
Standard deviation = 50%
Hence, the Standard deviation is 50%
A market failure is most likely to occur when: Multiple Choice many producers produce identical products, and only the consumers are affected by the transactions. a sole producer of a good faces no threat of competition. several producers of a good compete for customers by having price wars. several producers of a good search for the lowest-cost method of production.
Answer:
a sole producer of a good faces no threat of competition.
Explanation:
A market failure can be defined as a situation where there is inefficiency in the distribution of goods and services from the producers to the consumer in a free or open market.
A market failure is most likely to occur when a sole producer of a good faces no threat of competition. This ultimately implies that, a sole producer of a product is the sole determinant of prices of goods, quantity of goods and even choose to hoard the goods, thereby resulting in a market failure.
4. Murphy started putting $100/month into his 401(k) earning 6% APR when he was 25 years old. How much will be in his account when he retires at age 65, if interest is compounded monthly
Answer:
The amount in his account is $199,149.07
Explanation:
The computation of the amount in his account is shown below:
= {Compounding period × per month amount × {(1 + rate of interest ÷ Compounding period)^Compounding period × years - 1}} ÷ { rate of interest}
= {12 × $100 × {(1 + 0.06 ÷ 12)^12 × 40 - 1}} ÷ {0.06}
= $199,149.07
Years should be
= 65 - 25
= 40
Hence, the amount in his account is $199,149.07
"You are considering investing in a mutual fund. The fund is expected to earn a return of 15 percent in the next year. If its annual return is normally distributed with a standard deviation of 5.20 percent, what return can you expect the fund to beat 95 percent of the time? (Round answer to 2 decimal places, e.g. 52.75%.)"
Answer:
Expected return = 4.808% to 25.192%
Explanation:
Given:
Average rate of return = 15%
Standard deviation = 5.20%
At 95% Z value = 1.96
Find:
Expected return
Computation:
Expected return = Average return ± [Z× Standard deviation] Expected return = 15% ± [1.96 × 5.20%]
Expected return = 15% - 10.192% and 15% + 10.192%
Expected return = 4.808% to 25.192%
g A stock has an expected return of 16.00%. The risk-free rate is 1.63% and the market risk premium is 10.53%. What is the β of the stock?
Answer: Beta = 1.36
Explanation:
Using the Capital Asset Pricing Model CAPM formulae, we have that
Expected return= risk free rate+(betaXmarket risk premium)
16= 1.63 + ( beta x 10.53)
16-1.63= beta x 10.53
14.37/10.53 = beta
Beta = 1.36
Kai decides to add color and keep his price the same. This will increase variable costs by $0.40 per issue. What will be the new unit volume (copies per issue) required to maintain $500 profits and cover the increased fixed and variable costs?
Answer:
the first part of the question is missing, so I looked it up:
Kai sells a small magazine full of celebrity gossip to college students for $2.05 per copy. Hiring the printing press for one day, the only fixed cost, is $431 an issue. The variable cost of printing each issue is $1.19 per copy.
before color is added, the contribution margin and break even point were:
contribution margin = $2.05 - $1.19 = $0.86
break even point in units = $431 / $0.86 = 501.16 ≈ 502 units
break even point in $ = 502 x $2.05 = $1,029.10
if Kai wants to earn $500 in profits = $931 / $0.86 = 1,082.56 ≈ 1,083, Kai must sell 1,083 copies
after color is added:
contribution margin = $2.05 - $1.19 = $0.46
break even point in units = $431 / $0.46 = 936.96 ≈ 937 units
break even point in $ = 937 x $2.05 = $1,920.85
if Kai wants to earn $500 in profits = $931 / $0.46 = 2,023.91 ≈ 2,024, Kai must sell 2,024 copies
Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits. As a result, bank reserves will a. decrease and the money supply will eventually decrease. b. decrease and the money supply will eventually increase. c. increase and the money supply will eventually decrease. g
Answer: increase and the money supply will eventually decrease
Explanation:
Bank reserve simply means that the minimum funds that the commercial banks must have so that they'll be able to meet the requirements of the central bank.
When the people in a country gain more confidence in the banking system and so hold relatively less currency and more deposits, this will lead to an increase in the bank reserves. Since bank reserve has risen, the amount of money available that is, money supply will decrease due to the fact that the funds have been reserved and kept. It is a form of contractionary policy which is usually used when there's too much money in circulation.
A job order costing system is most likely used by which of the following? a pet food manufacturer a paper manufacturing company an accounting firm specializing in tax returns a stereo manufacturing company
Answer: An accounting firm specializing in tax returns
Explanation:
A Job-order costing system is used when a job is unique and so the costs associated with the different jobs cannot be accounted for in the same manner.
An Accounting firm that is specializing in tax returns will face unique costs per client that they provide their services for so they will have to use a Job order costing method to account for the costs associated with their individual clients.
g Suppose you invest $15,000 in Merck stock and $25,000 in Home Depot stock. You expect a return of 16% for Merck and 12% for Home Depot. What is the expected return on your portfolio?
Answer: 13.5%
Explanation:
From the question, we are informed that an individual invest $15,000 in Merck stock and $25,000 in Home Depot stock and expect a return of 16% for Merck and 12% for Home Depot.
The expected return on the portfolio will be:
= [($15,000/$40,000) × 16%] + [($25,000/$40,000) × 12%]
= (0.375 × 0.16) + (0.625 × 0.12)
= 0.06 + 0.075
= 0.135
= 13.5%
What generic competitive strategy has America West chosen to use in entering the air passenger market
Answer:
The generic competitive strategy that America West chose to enter the air passenger market is:
Low Cost (Cost-focused Leadership)
Explanation:
American West can acquire competitive advantage by pursuing one of Michael Porter's generic strategies. The Airline could have chosen to enter the air passenger market via lower costs than its competitors or by differentiating itself along dimensions valued by customers in order to be paid a higher fare. In 1983, it chose the lower cost strategy before merging with American Airlines in 2013.
Revenue on account amounted to $5,200. Cash collections of accounts receivable amounted to $4,900. Cash paid for expenses was $3,600. The amount of employee salaries accrued at the end of the year was $1,400. What is the net cash flow from operating activities for the year
Answer:
$5100
Explanation:
The net cash flow in this scenario can be calculated by adding all the incoming revenue of the company and subtracting all the expenses that would be outgoing. Incoming Revenue in this scenario would be the initial $5,200 and the accounts receivable of $4,900. While the outgoing expenses would be the cash for expenses of $3,600 and the employee salaries accrued of $1400. Now we can add and subtract them to calculate the net cash flow
$5200 + $4900 - $3600 - $1400 = $5100
Calculate current liabilities Sales Revenue $25,000 Accounts Payable $1,200 Accounts Receivable $2,600 Inventory $3,200 Supplies $300 Cost of Goods Sold $16,000 Notes Payable (due in 2 years) $24,000 Equipment $40,000 Accumulated Depreciation $12,000 Land $30,000 Unearned Revenue $1,100 Taxes Payable $1,400 Prepaid Rent (3 months) $2,100 Cash $5,200
Answer:
$3,700
Explanation:
Calculation for the current liabilities
CURRENT LIABILITIES
Account Payables $1,200
Unearned revenues $1,100
Taxes Payable $1,400
Total current liabilities $3,700
Therefore the Total current liabilities is $3,700
One of Hartman Company's activity cost pools is inspecting, with estimated overhead of $140,000. Hartman produces throw rugs (700 inspections) and area rugs (1,300 inspections). How much of the inspecting cost pool should be assigned to throw rugs
Answer:
the cost assigned to throw rugs is $49,000
Explanation:
The computation of the cost assigned to throw rugs is shown below:
Cost assigned is
= Estimated overhead × number of inspections ÷ total number of inspections
= $140,000 × 700 ÷ (700 + 1300)
= $49,000
hence, the cost assigned to throw rugs is $49,000
We simply applied the above formula so that the correct value could come
And, the same is to be considered
A firm has current assets that could be sold for their book value of $16 million. The book value of its fixed assets is $55 million, but they could be sold for $85 million today. The firm has total debt with a book value of $35 million, but interest rate declines have caused the market value of the debt to increase to $45 million. What is this firm's market-to-book ratio? (Round your answer to 2 decimal places.)
Answer:
2.81
Explanation:
The first step is to calculate the market value
= 16 million + 85 million
= 101 million
The book value can be calculated as follows
= 16 million + 55 million -35 million
= 36 million
Therefore the firm market to book ratio can be calculated as follows
= 101 million/36 million
= 2.81
InfoFree Inc., makes and sells devices and services for the circumvention of encryption software and other technological antipiracy protection. Under the Digital Millennium Copyright Act, this is
Answer:
a violation of copyright law.
Explanation:
The term "Digital Millennium Copyright Act" is also denoted as "DMCA" and was established in 1998 as an "anti-piracy statute" which is effectively responsible in making it illegal to the "circumvent copy protections" that are being designed to discriminate pirates from duplicating the "digital copyrighted" selling and works or tends to distribute them freely.
The violation of copyright law is described as a violation of an organization or individual's copyright. It is referred to as the unauthorized usage of any copyrighted material, for example, videos, text, software, photos, etc.
In the question above, the given statement represents the violation of copyright law.
An invoice
O A. is a demand for immediate payment
OB. must be paid within 10 days from the date of the invoice
O c. is the bill that the purchaser receives from the vendor
OD. is the purchaser's request for payment from the seller
An invoice is a bill that the purchaser receives from the vendor.
What does it mean to receive an invoice?
A bill is an invoice in that it has the itemized list of products sold or services provided, along with the amount of money owed for each item, and a total amount owed. However, when you receive an invoice, you would enter it as a bill that you owe. In other words, an invoice is sent, and a bill is received.
What is in an invoice?It includes the cost of the products purchased or services rendered to the buyer. Invoices can also serve as legal records if they contain the names of the seller and client, the description and price of goods or services, and the terms of payment.
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Activity based costing system differs from traditional costing systems in the treatment of ________.
Answer:
Indirect costs.
Explanation:
The total cost of a product varies with allocation of indirect costs. Direct costs don't seem to be making problems as they will be directly identifiable. Stebacks in traditional ranges from its pools of all the indirect costs and allocates them using the allocation bases to departments. This allocation method in certain cases doesn't be because it pools the indirect costs of all products of various stages while within the cost of individual activities are assigned first and are directly used because the basis of assigning cost to the final word cost objects. Implying that it assigns over heads to every activity first, then reallocates that cost to the individual product or service.
A proposed new project has projected sales of $201,000, costs of $93,000, and depreciation of $25,400. The tax rate is 22 percent. Calculate operating cash flow using the four different approaches. (Do not round intermediate calculations.)
Answer:
Please see below
Explanation:
• Approach 1
Tax shield approach
[(Sales - Expenses)(1-t) + Depreciation(t)]
[($201,000 - $93,000)(1-0.22) + $25,400(0.22)
Operating cash flow = $84,240 + $5,588
Operating cash flow = $89,828
• Approach 2
Free cash flow
EBIT [$201,000 - $93,000 - $25,400]
$82,600
Add: Depreciation
$25,400
Less: Taxes 22%(0.22 × $82,600)
($18,172)
Operating cash flow
$89,828
• Approach 3
Button up approach
Net income + Depreciation
Operating cash flow = $64,428 + $25,400
Operating cash flow = $89,828
• Approach 4
Top down approach
EBIT(1-t) + Depreciation
Operating cash flow = $82,600(1 - 0.22) + $25,400
Operating cash flow = $64,428 + $25,400
Operating cash flow = $89,828
g cd Marco deposited today $100,000 in a three-year, 12% Certificate of Deposit (CD) that compounds quarterly. What is the maturity value of the CD
Answer:
The maturity value of the CD is $142,576
Explanation:
The computation of the maturity value of the CD is shown below:
As we know that
Maturity Value = Deposit made × (1 + rate of interest)^number of years
where
r = 12% ÷ 4 = 3%
And,
n = 3 × 4 = 12
Now
The Maturity Value of a Cash Deposit is
= $100,000 × (1.03)^12
= $142,576
hence, the maturity value of the CD is $142,576
The common stock of the C.A.L.L. Corporation has been trading in a narrow range around $50 per share for months, and you believe it is going to stay in that range for the next three months. The price of a three-month put option with an exercise price of $50 is $4, and a call with the same expiration date and exercise price sells for $7.
Required:
a. What would be a simple options strategy using a put and a call to exploit your conviction about the stock price's future movement?
b. What is the most money you can make on this position? How far can the stock price move in either direction before you lose money?
c. How can you create a position involving a put, a call, and riskless lending that would have the same payoff structure as the stock at expiration? The stock will pay no dividends in the next three months. What is the net cost of establishing that position now?
Answer:
a) selling a call option to put in order to get a premium income
b) $7 + $4 = $11
c) The net cost of establishing the position = $50
Explanation:
Given data:
stock price = $50
Exercise price = $50
price of put option = $4
price of call option = $7
A) A simple option strategy would be
selling a call option to put in order to get a premium income
b) The most money that can be made = $7 + $4 = $11
C) create a position that involves a put, a call and riskless lending
The net cost of establishing the position = $50
