Transactions classified as investing activities include: purchase of equipment. Purchasing an investment with cash and sale of commercial buildings.
Which of the following transactions is not classified as an investment activity?Selling goods and services are is not classified as an investment activity. However, sales of goods and services are included in operating activities.
Is the purchase of shares an investment activity?Buying and selling fixed assets such as real estate, factories, and equipment are investment activities.
What transactions are classified as financing activities?Funding activities include transactions involving debt, equity and dividends. Debt and equity funding are reflected in cash flows from the funding section. This depends on different capital structures, dividend policies, or debt situations of companies.
Which of the following transactions would be classified as investing activities? (Check all that apply.).
a. The purchase of equipment. b. The purchase of investments for cash. c. The sale of a building used in the business.
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When Christopher dies, he wants to leave one half of his adjusted gross estate to his spouse and the other half of the estate to the American Cancer Society. What type of will does he need to create?
a) marital share will
b) exemption trust will
c) stated amount will
d) simple will
Answer:
I believe it is marital will
A company had issued 10,000 bonds which had a par value of $50 and currently sold at $60. The company is expected to pay 10% interest for the next 5 years. In addition to this the preferred stock of the company is issued at $150 which a promised dividend of 8 per share. The common stock holders will receive $2 per share and this will grow T 8% for the first 3 years, 6% for the other 3 years and it will grow at 5% for indefinite period. Assume the tax rate is 35%. The capital structure of the company is composed of 600,000 common stock, 200,000 preferred stock and 100,000 is debt.
A) Find the cost of capital for each sources A) Find the weighted average cost of capital
To calculate the cost of capital for each source, we'll consider the cost of debt, cost of preferred stock, and cost of common stock.
1. Cost of Debt:
The cost of debt is the interest rate the company pays on its debt. In this case, the company has issued bonds with a par value of $50, currently selling at $60, and a coupon rate of 10% for 5 years.
Cost of Debt = (Interest Expense / (Bonds Market Value - Bond Discount)) * (1 - Tax Rate)
Interest Expense = Bonds Market Value * Coupon Rate
Bonds Market Value = Number of Bonds * Bond Selling Price
Number of Bonds = 10,000
Bond Selling Price = $60
Coupon Rate = 10%
Tax Rate = 35%
Interest Expense = $60 * 10,000 * 10% = $60,000
Bonds Market Value = 10,000 * $60 = $600,000
Bond Discount = Par Value - Bond Selling Price = $50 - $60 = -$10 (Negative value because the bond is selling at a premium)
Cost of Debt = ($60,000 / ($600,000 - (-$10))) * (1 - 0.35) = $6,000 / $600,010 * 0.65 = 0.064997 (approximately 6.50%)
2. Cost of Preferred Stock:
The cost of preferred stock is the dividend rate the company pays on its preferred stock. In this case, the preferred stock is issued at $150 with a promised dividend of $8 per share.
Cost of Preferred Stock = Dividend / Preferred Stock Price
Dividend = $8
Preferred Stock Price = $150
Cost of Preferred Stock = $8 / $150 = 0.053333 (approximately 5.33%)
3. Cost of Common Stock:
The cost of common stock is calculated using the dividend growth model. The dividend is expected to grow at different rates for different periods.
First 3 years: Dividend Growth Rate = 8%
Next 3 years: Dividend Growth Rate = 6%
Indefinite period: Dividend Growth Rate = 5%
Cost of Common Stock = Dividend / Current Stock Price + Growth Rate
Dividend = $2
Current Stock Price = Market Price
Growth Rate = Dividend Growth Rate
Cost of Common Stock = $2 / Market Price + Growth Rate
Weighted Average Cost of Capital (WACC):
The weighted average cost of capital is the weighted average of the costs of each source of capital, considering their respective proportions in the capital structure.
WACC = (Weight of Debt * Cost of Debt) + (Weight of Preferred Stock * Cost of Preferred Stock) + (Weight of Common Stock * Cost of Common Stock)
Weight of Debt = Debt / Total Capital
Weight of Preferred Stock = Preferred Stock / Total Capital
Weight of Common Stock = Common Stock / Total Capital
Debt = $100,000
Preferred Stock = $200,000
Common Stock = $600,000
Total Capital = Debt + Preferred Stock + Common Stock = $100,000 + $200,000 + $600,000 = $900,000
Weight of Debt = $100,000 / $900,000 = 0.111111 (approximately 11.11%)
Weight of Preferred Stock = $200,000 / $900,000 = 0.222222 (approximately 22.22%)
Weight of Common Stock = $600,000 / $900,000 = 0.666667 (approximately 66.67%)
WACC = (0.111111 * 6.50%) + (0.222222 * 5.
The cost of capital for each source can be calculated by determining the cost of debt, cost of preferred stock, and cost of common equity. The cost of debt is 8.33%, the cost of preferred stock is 5.33%, and the cost of common equity is 14.77%.
To find the cost of capital for each source, we will calculate the cost of debt, cost of preferred stock, and cost of common equity.
The cost of debt can be calculated using the formula: Cost of Debt = (Annual Interest Payment / Bond Price) x 100%. In this case, the bond price is $60 and the annual interest payment is 10% of the bond's par value of $50, so the cost of debt is (0.10 * $50 / $60) x 100% = 8.33%.
The cost of preferred stock can be calculated using the formula: Cost of Preferred Stock = Dividend / Stock Price. In this case, the dividend is $8 per share and the stock price is $150, so the cost of preferred stock is $8 / $150 = 5.33%.
The cost of common equity can be calculated using the Dividend Discount Model (DDM) formula: Cost of Common Equity = Dividend / Current Stock Price + Growth Rate. The growth rate for the first 3 years is 8%, for the following 3 years is 6%, and for an indefinite period is 5%. The dividend for common stock is $2 per share. The current stock price can be calculated using the market value of the common stock ($2 * 600,000 = $1,200,000) divided by the number of shares (600,000), which equals $2 per share. The cost of common equity is $2 / $2 + 0.08 + 0.06 + 0.05 = 14.77%.
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If you had to recommend one product, which product would you recommend they create? Underline or highlight your answer:
● Organic Bloom Shampoo.
● Moisturizing Black Soap Shampoo with Dandruff Control.
● Coconut Protein Shampoo and Conditioner.
Answer:
the second option
Explanation:
my dandruff is pretty bad
Moisturizing Black soap Shampoo with Black dandruffs Ultimate control is what I would seriously recommend. A lot of people are getting dandruffs and lices more nowadays, so the product would be very fitting for the demand.
11. Identify five products sold in shops around your home. (5mks) 12. Identify any five occupations found in your trading centre. (5mks) 13. Outline the role of division of labour and specialisation. (5mks)
Groceries, apparel, electronics, books, and home products are the five items that are sold in stores close to my house. Shop owners, salespeople, the cashiers, guards for safety, and dry cleaners are the five jobs present in my trading center.
The separation of tasks and functions inside a system to boost production and efficiency is referred to as the division of labour and specialization.
Specialization enables workers to concentrate on the stages of the production process where they have an advantage, increasing productivity and output. The separation of roles and duties within a system is made possible by the division of labour, which boosts production and efficiency.
As a result, the significance of the five products sold in shops around home are the aforementioned.
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Compare and contrast the four market structures: monopoly, perfect competition, monopolistic competition, and oligopoly.
The following characteristics explain why the categories are different: In oligopoly, there are few producers, many in perfect and monopolistic competition, and one in monopoly.
Comparison between 4 types of competition in a free market system?In a free market economy, there are four different types of competition: perfect competition, monopolistic competition, oligopoly, and monopoly.
In Monopoly a state of the market where one firm has complete control over output and prices. In Perfect competition exists when all businesses sell the same goods, as in the market share has no bearing on prices, businesses can enter or quit the market without any obstacles and Monopolistic competition industry has minimal entry requirements, and decisions made by any one firm do not immediately affect those of its rivals. Though the Oligopoly markets where a few suppliers have a monopoly. They are present in every nation and a wide variety of industries. While some oligopoly markets are much more competitive than others, others can at least appear to be so.
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In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order: (1) 400 units at $7 on January 1, (2) 600 units at $10 on January 8, and (3) 930 units at $11 on January 29. Assume 1,130 units are on hand at the end of the month. Calculate the cost of goods available for sale, cost of goods sold, and ending inventory under the (a) FIFO, (b) LIFO, and (c) weighted average cost flow assumptions. Assume perpetual inventory system and sold 800 units between January 9 and January 28. (Round your intermediate calculations to 2 decimal places.)
Answer:
(a) FIFO
Cost of Goods Sold = $6,800
Ending Inventory = $12,230
(b) LIFO
Cost of Goods Sold = $7,400
Ending Inventory = $11,630
(c) weighted average cost
Cost of Goods Sold = $7,040
Ending Inventory = $11,990
Explanation:
Perpetual inventory method ensures that cost of sales and inventory value is determined after each and every transaction.
FIFO
This method assumes that the units to arrive first, will be sold first. This means the cost of sales is based on the earlier (old) prices and inventory valuation is based on recent (later) prices.
Cost of Goods Sold = 400 x $7 + 400 x $10 = $6,800
Ending Inventory = 200 x $10 + 930 x $11 = $12,230
LIFO
This method assumes that the units to arrive last , will be sold first. This means the cost of sales is based on the recent (later) prices and inventory valuation is based on earlier (old) prices.
Cost of Goods Sold = 600 x $10 + 200 x $7 = $7,400
Ending Inventory = 200 x $7 + 930 x $11 = $11,630
Weighted Average Cost Method
A new unit cost is calculated with each and every purchase made. This new unit cost is then used to determine the cost of goods sold and the value of inventory.
New Unit Cost - 8 jan = (400 x $7 + 600 x $10) ÷ 1,000 = $8.80
New Unit Cost - 29 jan = (200x $8.80 + 930 x $11) ÷ 1,130 = $10.61
therefore,
Cost of Goods Sold = 800 x $8.80 = $7,040
Ending Inventory = 1,130 x $10.61 = $11,990
Which of the following best describes how a condominium is owned?
O A. A group of partners own the building and rent each apartment to
the residents.
O B. The residents of a condominium are shareholders in a corporation
that owns the building.
C. A condominium is an apartment that is owned by the resident
rather than a landlord.
O D. Condominiums are apartments owned by a landlord who charges
rent to the residents.
Answer: A condominium is an apartment that is owned by the resident rather than a landlord.
so it would be O. A
A corporation had the following assets and liabilities at the beginning and end of this year. Assets Liabilities Beginning of the year $124,500 $53,373 End of the year 172,000 69,660 Owner made no investments in the business, and no dividends were paid during the year. Owner made no investments in the business, but dividends were $550 cash per month. No dividends were paid during the year, but the owner did invest an additional $45,000 cash in exchange for common stock. Dividends were $550 cash per month, and the owner invested an additional $35,000 cash in exchange for common stock. Determine the net income earned or net loss incurred by the business during the year for each of the above separate cases: (Decreases in equity should be indicated with a minus sign.).
Answer:
Hence, the net income earned or net loss incurred by the business during the year $102,340.
Explanation:
Why is Business process reengineering and organizational change seen to have a pain-pleasure relationship
Answer:ungesoma bana
Explanation:
Which of the following is a wise practice for making important purchases?
A. Skim return policies and warranties
B. Trust customer claims from the manufacturer
C. Ignore professional reviews
D. Be wary of customer testimonials
SUBMIT
Based on the question above, the correct answer is D
Be wary of customer testimonials SUBMITConsumer testimonialsThis is the reports from customers which will confirm the positivity or negativity of the product based on their experiences on the product.Therefore, the correct answer is D Be wary of customer testimonials SUBMIT
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Answer:D
Explanation: it’s right
Submission Requirements Hurry Pls Help ASAP!!!
Nine hundred word response.
When submitting written assignments, please remember to:
Submit the assignment question(s) and your responses.
Proofread for spelling, grammar, and punctuation.
Remember complete sentence structure.
Paragraphs need to have minimum of six sentences.
Submit your E.T.H.I.C.S. model of one of the provided scenarios.
When submitting written assignments, please remember to Proofread for spelling, grammar, and punctuation. Hence, option B is correct.
What is meant by Proofread?Proofread is the double-checking of the written assignment or the work that is being already done to the person. It helps the person to identify the little mistakes that they have made during the making of the assignment.
Proofread is always a better solution to understand the work and makes the work complete and perfect. After Proofread, one can identify their mistakes and make them correct.
Thus, option B is correct.
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A crab fisherman goes out to sea for weeks at a time catches as many crabs as possible and sells the crabs to larger distributors what field of business activity does this fall under
A crab fisherman goes out to sea for weeks at a time catches as many crabs as possible and sells the crabs to larger distributors .commercial industry field of business activity falls under this category.
Geographically, oceans are smaller than oceans and are usually found where land and ocean meet. Part of the ocean is usually surrounded by land. The sea is located at the edge of the sea and is partially surrounded by land.
The terms "sea" and "ocean" are often confused when talking about the sea. The ocean is usually considered a smaller body of water, partially covered by land. This often marks where the sea and land meet. Oceans generally refer to vast bodies of salty water that cover most of the earth.
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Which GPA does not appear on the transcript and therefore has to be calculated by the student for monitoring?
A. Term
B. Cumulative
C. Overall
Answer:
Explanation:
Cause GPA means the total grade point but CGPA means after completing the programme what is your cgpa.
Mountain High Ice Cream Company transferred $68,000 of accounts receivable to the Prudential Bank. The transfer was made without recourse. Prudential remits 90% of the factored amount to Mountain High and retains 10%. When the bank collects the receivables, it will remit to Mountain High the retained amount (which Mountain estimates has a fair value of $5,800) less a 2% fee (2% of the total factored amount).
Required:
Prepare the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met.
Answer:
Dr Cash $59,840
Dr Loss on Sale of Receivables $8,160
Dr Recievable from Factor $5,800
Cr Recourse liability $5,800
Cr Accounts Receivable $68,000
Explanation:
Preparation of the journal entry to record the transfer on the books of Mountain High assuming that the sale criteria are met.
Dr Cash $59,840
[(68,000 x .90) - (68,000 x .02)]
Dr Loss on Sale of Receivables $8,160
[(5,800 + 68,000) - ($59,840 + 5,800)]
Dr Recievable from Factor $5,800
Cr Recourse liability $5,800
($59,840+$8,160+5800-68,000)
Cr Accounts Receivable $68,000
(To record the transfer on the books of Mountain High)
Dr Loss on Sale of Rec = (5,800 + 68,000) - ($59,840 + 5,800) = $8,160
73,800-65650
what are 2 different types of budgets and discuss how they complement each other?
There are two main types of budgets: operational budgets and financial budgets.
Operational budgets are used to plan and monitor the day-to-day operations of a business, and typically cover a period of one year. These budgets include items such as revenue projections, production costs, and operating expenses. Operational budgets are crucial for ensuring that a business stays on track and meets its operational goals. Financial budgets, on the other hand, are focused on the long-term financial health of a business. They include items such as capital expenditures, financing costs, and cash flow projections. Financial budgets are used to help businesses plan for the future and make strategic decisions about investments and growth. These two types of budgets complement each other by providing a comprehensive view of a business's operations and financial health. Operational budgets help to ensure that day-to-day activities are aligned with the overall goals of the business, while financial budgets provide a roadmap for achieving long-term success. By using both types of budgets, businesses can make informed decisions about resource allocation, identify potential risks, and maintain a strong financial position over the long term.
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What is characteristic of Cloud computing?
The characteristic of Cloud computing are On-Demand Self-Service, Broad Network Access, Resource Pooling, Rapid Elasticity and Measured Service.
Cloud computing is a technology paradigm that offers on-demand access to a shared pool of computing resources over the internet. It is characterized by several key features:
On-Demand Self-Service: Cloud computing allows users to provision and access computing resources, such as servers, storage, and applications, as needed without requiring human interaction with service providers. Broad Network Access: Cloud services are accessible over the internet from a variety of devices, including desktop computers, laptops, tablets, and smartphones.Resource Pooling: Cloud providers consolidate and share computing resources, such as servers and storage, among multiple users or customers. Rapid Elasticity: Cloud services can rapidly scale up or down to accommodate fluctuating workloads and user demands. Measured Service: Cloud computing enables metering and monitoring of resource usage. Providers track and measure resource consumption, such as storage, processing, bandwidth, and active user accounts.For such more question on Elasticity:
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Before meeting a Japanese business partner, Larry decides that this person will be uncomfortable with overt displays of emotion. What mistake is Larry making
The mistake that Larry is making is applying a cultural stereotype as a fixed rule before getting to know an individual.
What are cultural stereotypes?These refer to thoughts about a society and culture by others. It shows how people view those of a certain culture often without proof.Larry is assuming that the stereotype of Japanese people looking down on emotional expression is true.
He is then basing his relationship on this stereotype before even meeting the person.
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According to the Damodaran text and any other sources, what are the three most important aspects of valuing a private firm, such as a sports team, and what are some of the difficulties in and ways of obtaining financial information? Provide a reference for at least your first posting.
The three most important indices for valuing a firm are:
Value of AssetsFinancial MetricsCorporate Governance.What is Valuation in Finance?The process of determining the present worth of an asset in finance is known as valuation. It is frequently the hypothetical price that a third party would pay for a specific item in a commercial environment. Assets and liabilities can both be valued.
The six steps to valuation are as follows:
Determine the goal.Examine the procedure.Methods of valuationUpscaling, integration, and bridgingCommunicate.Examine the procedure.For determining the economic worth of a firm, three types of valuation methodologies are typically used: market, cost, and income; each method has pros and disadvantages.
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Money serves three functions in the economy: medium of exchange, unit of account, and store of value.
For each of the following statements about inflation, indicate which function of money inflation is hindering.
Statement Store of value Unit of account Medium of exchange
Inflation erodes money's purchasing power.
Inflation causes menu costs.
In some countries with hyperinflation, prices are posted in terms of U.S. dollars rather than the local currency, even though the local currency is still used to purchase the good.
Answer:
medium of exchange
store of value
unit of account
Explanation:
Money is a valuable commodity and a medium of exchange. Modern economies use flat money that is not a community nor backed by the economy.
What do you mean by money as a medium of exchange?Money is a medium of exchange; allows people to get what they need to live. Trade was one of the exchanges of goods before money was created.
Like gold and other precious metals, money is a valuable commodity because to many people it represents something valuable.
About inflation, it leads the rise in prices and services and is a reason of the production of goods and services also gets affected in the economy.
Hence, Inflation affects the flow of money in the economy by reducing the purchasing power of clients.
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Reducing laws and rules businesses have to follow is an example of
Question 12 options:
comparative advantage
deregulation
production possibilities
regulation
Answer:comparative advantage
Explanation:
Deregulation can be defined as a process of reducing laws and rules business have to follow to conduct their regular business activities. Therefore, the option B holds true.
What is the significance of deregulation?Deregulation can be referred to or considered as a process of lowering the number or amount of regulations that are applicable to be followed by a person governed under such regulations. These regulations are completely binding upon the person who is being governed.
For example, when a government authority reduces the laws and rules needed to be followed by enterprises in its economy, it can be said that the government is following the process of deregulation in its economy. Deregulation may be done to promote the conduct of business activities.
Therefore, the option B holds true and states regarding the significance of the process of deregulation.
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Savers make deposits and investments in order to earn what?
Why don't savers invest their money directly with the businesses?
Answer:
Savers make deposits and investment in order to earn interest on their money. This often works very well because they do not earn only interest as a percentage of their money, but also interest as a percentage of previously accrued interest, something known as compound interest.
Savers do not invest their money directly with the businesses because real economic activity tends to be riskier (although it could also be more profitable for this same reason). This is why they often prefer to invest the money on financial instruments.
Is the coffee market growing or shrinking and why
How does disintermediation benefit the consumer? How might it harm the consumer? Can you think of any revolutionary businesses created in the past few years due to disintermediation? Be sure to describe one not mentioned already in the chapter.
Disintermediation in an economy keeps prices and predatory pricing in control since there are no retailers between wholesalers and customers.
The client loses store knowledge and may have to use a single wholesaler, which might lead to monopoly. Customer service is affected.
Airbnb, which connects consumers and searchers to property owners and hotels without agents, is an innovative company.
What is a consumer?Generally, The major advantage of disintermediation for consumers is lower costs and less predatory pricing since there is no store acting as an intermediary between a wholesaler and the consumer.
The only drawback for the consumer in such an agreement is that they may have to go with a single wholesaler, which might result in monopoly, and they lose out on the retailer's knowledge in the engagement. A customer's experience with the service is also affected.
When the platform connects consumers and searchers to home owners and hotels who sought a platform to engage and do business without any middlemen in between, Airbnb is the one revolutionary company that has occurred as a result of disintermediation.
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If a French bank opens a new branch office in California, where does this transaction appear in the balance of payments accounts
Answer:
Either U.S or france
Which type of behaviors accounts for most of the differences in both employee commitment and job performance?
A. Narcissistic behaviors
B. Change-oriented behaviors
C. Relationship-oriented behaviors
D. Emotional behaviors
E. Task-oriented behaviors
Answer:
Relationship-oriented behaviors
Explanation:
I did the assignment
Employee commitment is associated with the enhanced performance of the organization. Employee commitment has been linked to increased job satisfaction, motivation, and participation.
The business must place a greater emphasis on increasing employee dedication to superior efficiency.
The correct option is C. Relationship-oriented behaviors.
This is the correct option because the staff is offered task-oriented behavior in order to get things done and guarantee that corporate goals are reached. Showing care for employee sentiments and treating employees with respect are examples of people-oriented leader behavior.
People-oriented leaders sincerely care about their workers' well-being, and they show it through their personal behavior.
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The net income reported on the income statement is $97,309. However, adjusting entries have not been made at the end of the period for the
supplies expense of $2,135 and accrued salaries of $1,163. Net income, as corrected, is
a. $96,146
b. $97,309
c. $94,011
d. $95,174
BusineSS STUDIES GRADE 11 SBA TERM 2 VAST CREATIVES (VC) Vast Creative specialises in styling and Art direction in the advertising industry. The management of VC wants to change the structure of the business in order to introduce additional services. Some employees are resisting change as they feel that it is not necessary to change the business structure 1.3.1 Name the problem solving technique that VC could apply in order to change the structure of the business.
Vast Creative could apply the Systematic Problem Solving Technique to change the structure of the business.
What is the Systematic Problem Solving Technique all about?
The Systematic Problem Solving Technique is a helpful tool for businesses that are facing problems. This technique involves the following steps:
Define the problem; In this scenario, the problem is that the management wants to change the structure of the business in order to introduce additional services, but some employees are resisting change.Gather information. What information is needed to understand the problem? In this case, Vast Creative would need to gather information about the following; The current business structure and what are the critical concerns of employees that are resisting?Generate solutions. Once the problem has been defined and information has been gathered, Vast Creative can begin to generate solutions. Choose a solution. Once a number of solutions have been generated, Vast Creative can choose the solution that they believe is the best fit for their business. One of the solutions could be offering workshops to retrain employees or implementing the changes in stages to allow everyone to adjust at a reasonable pace.Implement the solution. Evaluate solutionsThrough the help of Systematic Problem Solving, Vast Creative could also try to address the resistance to change by:
Listenng to employees' concerns. It's important to understand why employees are resisting change. Once you understnd their concerns, you can address them head-on.
Providing training and support. Employees may be resistant to change because they're not sure how to do things differently. Providing training and support can help them to feel more comfrtable with the change.
Communicatng effectively. It's important to communicate the reasons for the change to employees. They need to understand why the change is necessary and how it will benefit them.
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suppose the income of consumer increased from 8000 to10000 birr. because of the change in income, quantity purchased from10 units to 12 ,how much is the income elasticity of demand,what types of goods the consumer buys and consume, explain result
The income elasticity of demand is 0.8, indicating that the good is a normal good and consumers buy and consume more of it as their income increases.
How to calculate Income Elasticity of Demand?To calculate the income elasticity of demand, we use the formula:
Income Elasticity of Demand = (Percentage Change in Quantity Demanded) / (Percentage Change in Income)
Given that the income increased from 8000 to 10000 birr, which is a 25% increase, and the quantity purchased increased from 10 units to 12 units, which is a 20% increase, we can plug these values into the formula:
Income Elasticity of Demand = (20% / 25%) = 0.8
Since the income elasticity of demand is positive (0.8), we can conclude that the good is a normal good. Normal goods are those for which demand increases as income rises, indicating that consumers buy and consume more of the good as their income increases.
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the following information applies to the questions displayed below.] a pension fund manager is considering three mutual funds. the first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a t-bill money market fund that yields a sure rate of 5.5%. the probability distributions of the risky funds are: expected return standard deviation stock fund (s) 16% 40% bond fund (b) 10% 31% the correlation between the fund returns is 0.11. required: what is the expected return and standard deviation for the minimum-variance portfolio of the two risky funds? (do not round intermediate calculations. round your answers to 2 decimal places.)
Setting E (rC) equal to 12% yields a standard deviation of 20.61% and the Proportion of bonds in the complete portfolio is 0.2453.
What is a standard deviation?The term “standard deviation” refers to a measurement of the data's dispersion from the mean. A low standard deviation implies that the data are grouped around the mean, whereas a large standard deviation shows that the data are more dispersed.
Step 1: Calculation of standard deviation on portfolio:
The equation for the CAL is
E (rc ) = r F +[E (rP) - rF / σP]σc
= 5.5 + 0.3154 σc
Setting E(rC) equal to 12%
12 = 5.5 + 0.3154 σc
σc = 20.61%
Setting E(rC) equal to 12% yields a standard deviation of 20.61%
Step 2: Calculation of mean of the complete portfolio as a function of the proportion invested in the risky portfolio
E(rC) = (l - y)rf + yE(rP) = rf + y[E(rP) - rf] = 5.5 + y(13.25 - 5.5)
Setting E(rC) = 12% ⇒ y = 0.8387 (83.87% in the risky portfolio)
1 - y = 0.1613 (16.13% in T-bills)
From the composition of the optimal risky portfolio:
Proportion of stocks in complete portfolio = 0.8387 x 0.7075 = 0.5934
Proportion of bonds in complete portfolio = 0.8387 x 0.2925 = 0.2453
Therefore, Setting E (rC) equal to 12% yields a standard deviation of 20.61% and the Proportion of bonds in the complete portfolio is 0.2453.
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Consider a labor market in equilibrium. If the demand curve shifts to the right while the supply curve stays constant, then the wage rate in the market will ________. Group of answer choices increase decrease remain unchanged either increase or decrease or remain unchanged
Answer:
prices will increase or remain