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Leya [2.2K]
2 years ago
10

Stock A has an expected return of 10% and a standard deviation of 20%. Stock B has an expected return of 13% and a standard devi

ation of 30%. The risk-free rate is 5% and the market risk premium, rM- rRF, is 6%. Assume that the market is in equilibrium. Portfolio AB has 50% invested in Stock A and 50% invested in Stock B. The returns of Stock A and Stock B are independent of one another, i.e., the correlation coefficient between them is zero. Which of the following statements is CORRECT? a. Portfolio AB's required return is 11%. b. Portfolio AB's standard deviation is 25%. c. Stock A's beta is 0.8333. d. Stock B's beta is 1.0000. e. Since the two stocks have zero correlation, Portfolio AB is riskless.
Business
1 answer:
Nina [5.8K]2 years ago
3 0

Answer:

Expected Portfolio return = 0.5(10)+0.5(13)= 5+6.5=11.5%

Expected Portfolio SD= 0.5(20)+0.5(30)= 25%

Beta of A, 10= 5+B(6)

5=6B

B= 5/6= 0.833

B of B, 13=5+B(6)

8=6B

B=8/6

B=1.33

b. Portfolio AB's standard deviation is 25%

c. Stock A's beta is 0.8333

These two statements are correct

Explanation:

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Answer: B. You can create a new vendor from the product/service information screen

Explanation:

The statement that is true regarding the Preferred Vendor field in Product and Services items is that can create a new vendor from the product/service information screen.

Other statements given in the question such as adding more than one preferred vendor to each product/service item and Preferred vendors must be assigned to utilize Price rules are not true.

Therefore, option B is the correct answer.

3 0
2 years ago
Country A has an absolute advantage over Country B in the production of both soybeans and corn. Explain a scenario in which both
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This is a key idea with international trade.  This involves what is known as comparative advantage.
let's say country A can produce a ton of soybeans in 4 hours and a ton of corn in 2 hours.  While country B can produce a ton of soybeans in 15 hours and a ton of corn in 5 hours.  
Looking at this set up you can see that country A can produce both corn and soybeans faster, so they have an absolute advantage in both!
However what trade is based on is opportunity cost.  So if we think about how much corn country A has to give up to produce soybeans, they have to divert a total of 4 hours from corn to soy beans to produce one ton of soy beans.  That 4 hours could be used to produce 2 tons of corn (since 2 hours for 1 ton and we're taking away 4 hours!).  So opportunity cost of soybeans in country A is 2 corn.
In country B they would need a total of 15 hours to produce one extra ton of soybeans, but those 15 hours could instead be used to produce 3 tons of corn (5 hours per ton and we're stealing 15 total hours).  That means country B's opportunity cost is 3 corn.
Since A has a lower opportunity cost in produce soybeans they will specialize and B will specialize in corn.  
3 0
2 years ago
The Square Box is considering two independent projects, both of which have an initial cost of $18,000. The cash inflows of Proje
Liula [17]

Answer:

The Square Box should accept Project B only

Explanation:

Square Box should decide the project whose Net present value (NPV) of future cash inflow is higher than the initial cost of investment

NPV of cash inflow from Project A = 3,000/(1+12%)+7,000/(1+12%)^2+10,000/(1+12%)^3 = $15,377, lower then initial cost of $18,000 → deny Project A

NPV of cash inflow from Project B = 3,000/(1+12%)+7,000/(1+12%)^2+15,000/(1+12%)^3 = $18,936, higher then initial cost of $18,000 → accept Project B

6 0
2 years ago
Oni makes apple pies for the local bakery. when toni works with an assistant, she produces 60% more apple pies and works 20% few
Georgia [21]
<span>Let us assume Toni made 100 apple pies in 10 hours, that means 10/hour. Now, with help of assistant she produces 60% more and work for 20% less time.
So, [100+(60% of 100)] = 160 apple pies produced in [10-(20% of 10)]= 8 hours.
   160/8 = 20/hour
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8 0
2 years ago
Which category of GDP does each of the following items count in? Enter one of the following letters to correspond to consumption
elena-14-01-66 [18.8K]

Explanation:

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<em> This transaction does not count because GDP is measured in one year. Nissan sell will be accounted in the next year GDP. </em>

-An auto parts maker buys an idle textile plant in North Carolina with the intent of converting it to a distribution center_I__.

<em>This is private investment of the auto parts maker. </em>

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<em>This is a expense of the U.S government. </em>

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<em>This is a expense of the U.S government. </em>

-A local bakery buys 500 pounds of flour to make bread __I__.

<em>This is private investment of the bakery. </em>

-A doctor buys a painting to hang in his office waiting area from an artist on Etsy __I__

<em>This is private investment because if his office looks better maybe this will attract more clients. </em>

-A family rents a beach house for a week's vacation __C__.

<em>This is household’s consumption. </em>

-A retiree in Chicago receives a Social Security check from the U.S. Treasury__G___  

<em>This is an expense of the U.S government</em>.

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7 0
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