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Ivanshal [37]
2 years ago
13

Stock Y has a beta of 1.2 and an expected return of 12.1%. Stock Z had a beta of 0.8 and an expected return of 7.85%. The risk-f

ree rate is 2.4% and the market risk premium is 7.2%. Are these stocks correctly priced
Business
1 answer:
levacccp [35]2 years ago
6 0

Answer:

Since the expected return and required return are different for both Stock X and Z, we say that they are not correctly priced

Explanation:

<em>To determine whether or not the stocks are correctly priced ,</em>

<em>we have to compare the r</em><em>equired return</em><em> and the </em><em>expected return on each of them.</em>

Required return = Rf +β (Rm-Rf)

Note that Rm-Rf  is also known as market risk premium

                                  <em>Stock Y                         Stock Z</em>

<em>Required return   </em>       2.4% + 1.2(7.2%)            2.4% + 0.8(7.2%)

                                  = 11%                                   = 8.2%

<em>Expected return</em>            <em>12.1%                           7.85%</em>

Since the expected return and required return are different for both Stock X and Z, we say that they are not correctly priced

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From the beginning of 2000 until its peak in 2012, Apple’s stock price rose from $27.97 to $702.10, an increase of 25 times. Yet
Tcecarenko [31]

Answer:

Steve Jobs coming back, Innovations, and Tim Cook taking over as COO

Explanation:

The fluctuations in stock prices of a company are due to improved performance of the company in meeting it's objectives and perception that the business will do better in the future.

In the given scenario there was an initial increase in Apple’s stock price from $27.97 to $702.10, an increase of 25 times.

This can be attributed to the return of Steve Jobs as the CEO of Apple. There was a confidence boost by his coming back. Also there were various innovations like: iPhone, iMac, iPod, and iTunes. These improved the performance and by extension share price of Apple.

However when Tim Cook took over as COO he reduced production by half resulting in stock price decrease by 37% from its peak in September 2012 until the end of March 2013, from $702.10 to $442.66.

3 0
2 years ago
A household appliances manufacturer has hired you to help analyze their social media datasets to determine which of their refrig
DedPeter [7]

Answer: sentiment analysis software

Explanation: The Content is produced through social networks, through Web forms, through mobile applications. Content is created by your customers, your market, by thought leaders, employees, and other enterprises. They are sharing opinions, ideas, comments, requesting information, expressing concerns, discussing technologies and products and influencing. Valuable information is trending within those conversations, threads, and post .Uncovering and translating social data into tangible insights has become one of the key challenges for Sentiment Analysis technology providers wanting to propose a real social mining solution to their users. The sentiment analysis software is a specialized classification engine used to identify and evaluate subjective patterns and expressions of sentiment within textual content. The analysis is performed at the topic, sentence, and document level and is configured to recognize whether portions of text are factual or subjective and, in the latter case, if the opinion expressed within these pieces of content are positive, negative, mixed, or neutral. The combination of machine learning with natural language processing techniques, the sentiment analysis is one of the most powerful engines available .

5 0
2 years ago
Suppose that the demand equation for Bobby Dolls is given by q = 216 – p2, where p is the price per doll in dollars and q is the
NikAS [45]

Answer:

P.Ed at p = 5 :- 0.26

Revenue maximising price = 8.5 ; Maximum Total Revenue = 1222

Explanation:

Price Elasticity of Demand shows responsive change in demand, due to change in price.  P.Ed = ( dq / dp ) x ( p / q )

q = 216 - p^2

dq / dp = - 2p  

P.Ed = dq / dp x ( p / q )  

So, PEd = ( -2p ) x ( p / q )

[ (- 2p) (p) ] / [ 216 - p^2 ]

(- 2p^2 ) / ( 216 - p^2 )

Putting value of P = 5 in P.Ed

<u>- 2(25) </u>

216 - 25

= - 50 / 191

P.Ed = 0.26

Revenue is the total value of receipts from sale of goods & services. TR = p x q

q = 216 - p^2

TR = 216p - p^3

To find price maximising TR , we will derivate TR function with respect to 'p'  

d TR / d p = 216 - 3p^2  

d TR / d p = 216 - 3p^2   = 0

3p^2 = 216

p^2 = 216 / 3

p^2 = 72

p = √ 72

p = 8.5

Finding maximum revenue ; Putting price = 8.5 in TR function

TR = 216p - p^3

216 (8.5) - (8.5)^3

1836 - 614

1222

7 0
2 years ago
Weisbro and Sons purchases its inventory one quarter prior to the quarter of sale. The purchase price is 60 percent of the sales
zvonat [6]

Answer:

Total disbursements     81,666.66

Explanation:

The company pays within 60 daysand a quarter has 90 days. Therefore; from each quarter 1/3 are paid within the quarter (days 1-30) The subsequent days, from day 31 to 90 are paid within the next quarter.

During Q2 we are going to pay a third of the Q1 sales

and two third of the current quarter.

         109,000 x  1/3 =      36,333.33

         68,000  x  2/3 =   <u>  45,333.33   </u>

Total disbursements     81,666.66

6 0
2 years ago
Jake considers himself to be a follower of Thomas Malthus. Which of the following statements would Jake be most likely to make?
Ber [7]

Answer:

D

Explanation:

The Malthus theory states that population should be controlled because there are no enough resources to please the future needs. This is how it works: in the short-run there is a change in technology that leads to an increase in income. Because people have more income, better life standards, the birth rate increases and exceeds the death rate. In the long-run total income would have to be distributed between more people than before and the economy reaches the equilibrium again, in which the birth rate equals the death rate.

In other words, econmic success becomes a reproductive success.

3 0
2 years ago
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