Juan files a lawsuit against liliana. liliana responds to the complaint by filing an answer. after the pleadings are closed, jua
1 answer:
You might be interested in
Answer:
risk free rate of return is = 11.37 %
Explanation:
given data
K expected rate of return = 13%
K standard deviation = 19% = 0.19
L expected rate of return = 10%
L standard deviation = 16% = 0.16
to find out
risk-free portfolio rate of return
solution
first we find here weight of each portfolio
weight of K = ..................1
weight of K =
weight of K = 0.4571 = 45.71%
and
weight of L = 1 - 0.4571
weight of L = 0.5428 = 54.28 %
so that
risk free rate will be here
risk free rate = ( weight of K × K expected rate of return ) + ( weight of L + L expected rate of return ) ..........................2
risk free rate = ( 45.71 % × 13 % ) + ( 54.28 % + 10% )
risk free rate = 11.37 %
Answer:
D.
Municipal bond because the equivalent taxable yield is 6.6%
Explanation:
we should make the important difference that municipal bonds are tax free while corporate bonds don't.
Therefore we should solve for the after tax rate fo the corporate bond:
The corporate bond as a yield of 4.5% after taxes which is lower than the municipal bond. This make it more attractive
We can also solve for the pre-tax rate of the municipal bond:
the municipal bonds would be equivalent to a 6.6% corporate bonds.
This makes option D correct.