The mean of the complete portfolio as a function of the proportion invested in the risky portfolio (y) is: E(rC) = (l - y)rf + yE(rP) = rf + y[E(rP) - rf] = 5.5 + y(12.88 - 5.5) Setting E(rC) = 12% ==> y = 0.8808 (88.08% in the risky portfolio) 1 - y = 0.1192 (11.92% in T-bills) From the composition of the optimal risky portfolio: Proportion of stocks in complete portfolio = 0.8808 × 0.6466 = 0.5695 Proportion of bonds in complete portfolio = 0.8808 × 0.3534 = 0.3113 12. 1. Using only the stock and bond funds to achieve a mean of 12% we solve: 12 = 15wS + 9(1 - wS) = 9 + 6wS Þ wS = 0.5 Investing 50% in stocks and 50% in bonds yields a mean of 12% and standard deviation of: sP = [(0.502 × 1024) + (0.502 × 529) + (2 × 0.50 × 0.50 × 110.4)] 1/2 =
Kroger has greater ROA performance at 6.4% in comparison to 6.0%. However they do have a weaker profit margin at 2.0% vs. 2.4%. Kroger overpowers this profit margin weakness by displaying quicker asset turnover at 3.171 (Kroger) vs. 2.509 (Safeway). 3. Which company was the more profitable in 2004?
Determine the equation of the ‘best fit’ line, which describes the relationship between CREDIT BALANCE and SIZE. The equation of the ‘best fit’ line or the regression equation is Credit Balance ($) = 2582 + 404 Size 3. Determine the coefficient of correlation. Interpret. The coefficient of correlation is given as r = 0.752843.
(Select the best answer.) (Points : 1) Answer: Steel 12. Which of the following allows you to pool your money and invest in a portfolio with other investors? (Select the best answer.) (Points : 1) Answer: A mutual fund 13.
Although the bonds have the lowest cost of issuance among the choices, its Net Present Value (NPV) of $219 million is lower than the HUD 242. The Business Dictionary defines NPV as “the difference between the present value of the future cash flows from an investment and the amount of investment” (Business Dictionary, p. 1, 2012). The collateral requirement for the bonds is also much higher than the HUD 242. Because the collateral includes escrow on ECH’s gross receivables, ECH possibly may have less control over its future revenue stream. The simulator also took note of the four-year time frame of the expansion project versus the three-year spending limit on the bonds.
a) PKR 3,200 b) PKR 18,000 c) PKR 30,000 d) PKR 33,200 15. Firm A has a Return on Equity (ROE) equal to 24%, while firm B has an ROE of 15% during the same year. Both firms have a total debt ratio (D/V) equal to 0.8. Firm A has an asset turnover ratio of 0.9, while firm B has an asset turnover ratio equal to 0.4. From this we know that a) Firm A has a higher profit margin than firm B b) Firm B has a higher profit margin than firm A c) Firm A and B have the same profit margin d) Firm A has a higher equity multiplier than firm B 16.
5, 6) Lima Parts, Inc., shows the following overhead information for the current period: Actual overhead incurred $ 29,400 2/3 of which is variable Budgeted fixed overhead $ 8,640 per hour Standard variable overhead rate per direct labor-hour $ 9.00 Standard hours allowed for actual production 2,350 hours Actual labor-hours used 2,200 hours ________________________________________ Required: What are the variable overhead price and efficiency variances and fixed overhead price variance? (Input all amounts as positive values. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Omit the "$" sign in your response.) Amounts Variable overhead: Price variance $ (0%) (0%) Efficiency variance $ (0%) (0%) Fixed overhead: Price variance $ (0%) (0%) ________________________________________ P16-45 Overhead Variances (L.O.
This statement is true for: 29 What method of inventory valuation should be used for economic decision-making problems? 30 ____ are defined as costs which are incurred regardless of the alternative action chosen in a decision-making problem. 31 If TC = 321 + 55Q - 5Q2, then average total cost at Q = 10 is: 32 According to the theory of cost, specialization in the use of variable resources in the short-run results initially in: MIDTERM QUIZ 2 The different methods by which the sellers inform their potential buyers about the product is called: knowledge
Find the real return on the following investments: Stock Nominal Return Inflation A 10% 3% B 15% 8% C -5% 2% ? Find the real return, nominal after-tax return, and real after-tax return on the following: Stock Nominal Return Inflation Tax Rate X 13.5% 5.0% 15% Y 8.7% 4.7% 25% Z 5.2% 2.5% 28% How are industry-operating differences reflected in a firm’s financial statements? week 6 Assignment
Therefore, the recommendation project which have higher rate of return than 25% is project B. 3.3 Net Present Value Project A Year | 11% Col. | Net Cash Inflow | Present Value of Net Cash Inflow | 1 | 0.901 | 7,500 | 6,757.5 | 2 | 0.812 | 7,750 | 6,293 | 3 | 0.731 | 8,000 | 5,848 | 4 | 0.659 | 7,750 | 5,107.25 | 5 | 0.593 | 7,500 | 4,447.5 | Total PV of Net Cash Inflow = $28,453.25 Less Investment =