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hodyreva [135]
2 years ago
12

Consider two perfectly negatively correlated risky securities, K and L. K has an expected rate of return of 13% and a standard d

eviation of 19%. L has an expected rate of return of 10% and a standard deviation of 16%. The risk-free portfolio that can be formed with the two securities will earn _____ rate of return.
Business
1 answer:
mihalych1998 [28]2 years ago
4 0

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 = \frac{L standard deviation}{K standard deviation+ L standard deviation}      ..................1

weight of K = \frac{0.16}{0.19+0.16}

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 %

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Five years ago, Weed Go Inc. earned $1.50 per share. Its earnings this year were $3.20. What was the growth rate in earnings per
podryga [215]

Answer:

Option C 16.36% is correct.

Explanation:

We can find the growth using the following growth formula:

g = (Earning per share today / Earning per share n years ago)^(1/5)  - 1

EPS of this year is $3.2 per share and 5 ago was $1.5 per share.

So by putting values we have:

g = (3.2 / 1.5) ^(1/5)  - 1  = 16.36%

The right option is C.

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2 years ago
Moretti Department Store sells gift cards that expire three years from the date of purchase. During 2019, Moretti sold $50,000 o
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Answer:

$64,300

Explanation:

The amount of revenue that Moretti Department store should recognize as revenue in 2021 should be based on the redeemed amount in the year and unused balance:

1. $1,500 were redeemed during 2021

2. $800 2019 balance remains unused

3. $22,000 were redeemed in 2021

4. $40,000 were redeemed in 2021

Total Revenue for 2021 = $64,300

8 0
2 years ago
Angelica Canizales is the CEO of Mucho Dinero Enterprises. Sales have dropped for four consecutive years and accountants have re
FinnZ [79.3K]

Angelica's decision to completely redesign Mucho Dinero's organization indicates that she believes the best approach to her firm's problems is

A. restructuring.

Explanation:

Angelica has found that the problem that riddles her company is not something from the outside that can be cured from bailing out certain elements but comes from within in that it is imbibed in their own structure as a firm.

This means that they are lacking in communication between different structures inside the company. So the restructuring of the functional structures keeping in mind communication flow can do the trick for the firm.

5 0
2 years ago
You have been working on a new entrepreneurial venture with a few friends for the past year. Everyone’s efforts are really start
brilliants [131]

Answer:

A. determining a few key ideas and how to best sequence them.

Explanation:

The effective communication is one in which the speaker is able to disseminate his ideas to the listener correctly. The panel of successful entrepreneur is interested in investing in the venture. The meeting is limited to 15 minutes so we should cover only key points and focus on their benefits of investing. The Entrepreneur has time to listen key ideas and its upon us to best sequence those ideas which leave a positive impact on the panel.

4 0
2 years ago
Maggie bought 20 shares of Google at the close price of $472.68. She bought
ioda

Answer:

C. $1,060

Explanation:

First transaction

20 shares of Google at close price of $472.68

= 20 × $472.68

= $9,453.6

Second transaction, a year later;

she bought 20 shares at close price of $491.32

= 20 × $491.32

= $9,826.4

Third transaction. Two years later, she sold all her shares;

In total 3 transactions, Maggie's broker charge will be;

$50 × 3 = $150

The last transaction will get($512.25 per share for 20 + 20 = 40 shares)

40 × $512.25 = $20,490

Maggie will get $20,490 less $150 due to the brokerage's charge.

$20,490 - $150 = $20,340

To get how much Maggie makes,

= Total value of third transaction (Sales of shares) - (Total value of first transaction + Total value of Second transaction)

= $20,340 - ($9,453.6 + $9,826.4)

= $1,060

5 0
2 years ago
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