Answer:
standard deviation = 15.21%
so correct option is B. 15.21%
Explanation:
given data
expected return US = 18%
standard deviation of return US = 15%
expected return canadian = 13%
standard deviation of return canadian = 20%
covariance of returns = 1.5 %
to find out
standard deviation of return
solution
standard deviation is find here as given formula that is
standard deviation = 
................1
here w1 is amount invested in US stock and w2 is investment in canada and σ1 is Standard deviation return of US and σ2 is Standard deviation return of canada
put here value in equation 1 we get
standard deviation = 
solve it we get
standard deviation = 0.1520690
standard deviation = 15.21%
so correct option is B. 15.21%
Answer:
rework the units by spending $750 extra in order to get $1,500 in revenue
Explanation:
The company incurred in the following sunk costs:
- production costs = $2 per unit
Since the 500 units were all defective the company can:
sell the defective units at $1 each = $1 x 500 = $500 revenue
reworking the units for $1.50 each and selling them for $3 ⇒ contribution margin = $3 - $1.50 = $1.50 per unit, which results in a $750 gross profit
The company must consider the $1,000 spent first as sunk costs, since whatever action they decide, they will not recover them. Therefore the company must only analyze the alternatives starting from scratch.
B in my option you should always have a back up plan but it's also very important to commit when you've found something that you enjoy and are capable of doing.
The statement,"A real option enables the investor to buy an option for a small initial investment, hold it until a decision point arrives, and then exercise or abandon the option." is False
.
<u>Explanation:
</u>
A real option is to give corporate investment options to a company's executives. It is called "actual" because it usually refers to projects that involve a tangible asset rather than a financial product. Physical assets such as equipment, capital assets and the products are tangible assets.
The decision to extend or delay or wait or to leave a proposal may be real options. Real options require decisions or preferences that give people discretion and possible benefits when making financial decisions.
Answer:
=> fraction of the portfolio that should be allocated to T-bills = 0.4482 = 44.82%.
=> fraction to equity = 0.5518 = 55.18%.
Explanation:
So, in this question or problem we are given the following parameters or data or information which are; that the utility function is U = E(r) – 0.5 × Aσ2 and the risk-aversion coefficient is A = 4.4.
The fraction of the portfolio that should be allocated to T-bills and its equivalent fraction to equity can be calculated by using the formula below;
The first step is to determine or Calculate the value of fraction to equity.
Hence, the fraction to equity = risk premium/(market standard deviation)^2 - risk aversion.
= 8.10% ÷ [(20.48%)^2 × 3.5 = 0.5518.
Therefore, the value for fraction of the portfolio that should be allocated to T-bills = 1 - fraction to equity = 1 - 0.5518 =0.4482 .
