Answer:
a. adds $10,000 in bank reserves.
Explanation:
Given that
Reserve requirement is 20%
Now if you want to pay back the loan of $10,000 so here the act of paying back the loan is that the amount of loan i.e. $10,00 would get added to the bank reserves
Therefore as per the given situation, the option a is correct
And, the same is to be considered
Thus, all the other options are incorrect
Sheridan Company reports the following information (in millions) during a recent year: net sales, $17,371.2; net earnings, $481.6; total assets, ending, $6,899.2; and total assets, beginning, $6,806.4. Calculate the (1) return on assets, (2) asset turnover, and (3) profit margin ratios. (Round answers to 1 decimal place, e.g. 15.2% or 15.1.)
Answer and Explanation:
The computation is shown below:
As we know that
1. Return on assets is
= Net income ÷ avg total assets
where,
Avg total assets is
= (opening total assets + closing total assets) ÷ 2
= ($6,806.4 + $6,899.2) ÷ 2
= $6,852.8
Now return on asset is
= $481.6 ÷ $6,852.8
= 7.0%
2. Assets turnover ratio = net sales ÷ avg total assets
= $17,371.2 ÷ $6,852.8
= 2.5 times
3. Profit margin = net income ÷net sales
= $481.6 ÷ $17,371.2
= 2.8%
Assuming a taxpayer has no other gains or losses for the year, a loss from the theft of a Section 1231 asset is treated as a capital loss.A. True B. False
If a bank has a reserve ratio of 8 percent, then Group of answer choices the bank keeps 8 percent of its assets as reserves and loans out the rest. the bank keeps 8 percent of its deposits as reserves and loans out the rest. the bank's ratio of loans to deposits is 8 percent. government regulation requires the bank to use at least 8 percent of its deposits to make loans.
Answer:
the bank keeps 8 percent of its deposits as reserves and loans out the rest.
Explanation:
Since it is mentioned in the question that there is a reserve ratio of 8% so now the reserve requirement means the requirement with respect to the fund value that bank should hold on to in reserve against deposits that made by their clients. The money must be either at the vaults of the bank or at the closing of the federal reserve bank
Therefore the second option is correct
Economics..Match the following..
Answer:
1
4
2
5
3
Explanation:
When a company collects sales tax from a customer, the event results in a(n) ________ in Cash and a(n) ________ in Sales Tax Payable.
a. increase; decrease
b. increase; increase
c. decrease; decrease
d. decrease; increase
Answer:
The correct option is option (b) increase; increase
Explanation:
Since the company collect the sales tax from a customer so here the cash is received that means cash is increased while on the other hand the sales tax payable is a liability so it is also increased. Moreover, the cash has the debit balance while on the other hand the liabilities has the credit balance
hence, the option (b) is correct
Upon arrival at the international airport in the country of Canteberry, Charles Alt exchanged $200 of U.S. currency 1,000 florins, the local currency unit. Upon departure from Canteberry's international airport on completion of his business, he exchanged his remaining 100 florins into $15 of U.S. currency.
Required:
a. Determine the currency exchange rates for each of the cells in the following matrix for Charles Alt's business trip to Canteberry.
b. Discuss and illustrate whether the U.S. dollar strengthened or weakened relative to the florin during Charles's stay in Canteberry.
c. Did Charles experience a foreign currency transaction gain or a loss on the 100 florins he held during his visit to Canteberry and converted to U.S. dollars at the departure date? Explain your answer.
Arrival Date Departure Rate
Direct exchange rate
Indirect exchange rate
Answer:
Explanation:
Here's the answer!! Hope this helped...
a. Exchange rate for buying florins = 5 florins per U.S. dollar and Exchange rate for selling florins = 0.15 U.S. dollars per florin
b. At the beginning of his trip, the exchange rate for buying florins was 5 florins per U.S. dollar. At the end of his trip, the exchange rate for selling florins was 0.15 U.S. dollars per florin.
c. Charles experienced a foreign currency transaction loss on the 100 florins he held during his visit to Canteberry and converted to U.S. dollars at the departure date.
a. To determine the currency exchange rates for each of the cells in the matrix, we can use the given information:
1. Charles exchanged $200 into 1,000 florins at the beginning of his trip.
Exchange rate for buying florins = Amount in local currency / Amount in U.S. dollars
Exchange rate for buying florins = 1000 florins / $200
Exchange rate for buying florins = 5 florins per U.S. dollar
2. Charles exchanged his remaining 100 florins into $15 at the end of his trip.
Exchange rate for selling florins = Amount in U.S. dollars / Amount in local currency
Exchange rate for selling florins = $15 / 100 florins
Exchange rate for selling florins = 0.15 U.S. dollars per florin
The completed matrix would be:
| - | U.S. Dollars ($) | Florins |
| Buying | 1 | 5 |
| Selling | 0.15 | 1 |
b. To discuss whether the U.S. dollar strengthened or weakened relative to the florin during Charles's stay in Canteberry, we compare the exchange rates at the beginning and end of his trip.
If the exchange rate for buying florins (5 florins per U.S. dollar) is higher than the exchange rate for selling florins (0.15 U.S. dollars per florin), it means that the U.S. dollar strengthened relative to the florin during Charles's stay in Canteberry. In other words, Charles could get more florins for each U.S. dollar at the beginning of his trip than he could get U.S. dollars for each florin at the end of his trip.
c. This is because the exchange rate for selling florins (0.15 U.S. dollars per florin) was lower than the exchange rate for buying florins (5 florins per U.S. dollar).
When Charles initially exchanged $200 into 1,000 florins, he got 5 florins per U.S. dollar. However, when he exchanged his remaining 100 florins back into U.S. dollars at the end of his trip, he got only 0.15 U.S. dollars per florin.
To illustrate the transaction:
Initial exchange:
$200 --> 5 florins per U.S. dollar --> 5 florins * 200 = 1,000 florins
Exchange at departure:
100 florins --> 0.15 U.S. dollars per florin --> 100 florins * 0.15 = $15
Charles initially got $200 worth of florins (1,000 florins), but when he converted the remaining 100 florins back into U.S. dollars, he received only $15. This difference of $200 - $15 = $185 represents a foreign currency transaction loss during his trip.
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Jefferson's recently paid an annual dividend of $1.31 per share. The dividend is expected to decrease by 4% each year. How much should you pay for this stock today if your required return is 16%? A 5.5 percent coupon bond ( coupon rate=5.5%) has a face value of 1,000 and a current yield of 5.64 percent. What is the current market price?
Answer:
a. The price that should be paid for Jefferson's stock today is $6.29.
b. The current market price is $975.18.
Explanation:
a. Calculation of the price to pay for the Jefferson's stock today
This can be calculated using the following formula:
P = D / (r - g) ............................ (1)
Where;
P = Price per share today = ?
D = Next dividend = Current dividend * (1 + Dividend growth rate) = $1.31 * (1 + (-0.04)) = $1.31 * (1 - 0.04) = $1.31 * 0.96 = 1.2576
r = Required return = 16%, or 0.16
g = Dividend growth rate = -4%, or -0.04
Substituting the values into equation (1), we have:
P = 1.2576 / (0.16 - (-0.04))
P = 1.2576 / (0.16 + 0.04)
P = 1.2576 / 0.20
P = 6.29
Therefore, the price that should be paid for Jefferson's stock today is $6.29.
a. Calculation of the current market price
This can be calculated using the following formula:
Current market price = (Coupon rate * Face value) / Current yield ............ (2)
Where;
Coupon rate = 5.5%
Face value = $1,000
Current yield = 5.64%
Substituting the values into equation (2), we have:
Current market price = (5.5% * $1,000) / 5.64%
Current market price = $55 / 5.64%
Current market price = $975.18
Therefore, the current market price is $975.18.
Molly has generated general business credits over the years that have not been utilized. The amounts generated and not utilized equal:
Answer:
the question is incomplete since its missing most of its content:
Molly has generated general business credits over the years that have not been utilized. The amounts generated and not utilized follow:
year unused business credits
2013 $2,500
2014 $7,500
2015 $5,000
2016 $4,000
In the current year, 2017, her business generates an additional $15,000 general business credit. In 2017, based on her tax liability before credits, she can utilize a general business credit of up to $20,000. After utilizing the carryforwards and the current year credits, how much of the general business credit generated in 2017 is available for future years?
Accumulated business credits up to 2016 = $2,500 + $7,500 + $5,000 + $4,000 = $19,000
Additional business credits generated during 2017 = $15,000
total business credits available at the end of 2017 = $34,000
if she can use $20,000 this year to reduce her tax liability, the ending balance of unused business credits that can be carried forward = $34,000 - $20,000 = $14,000
Nanometrics, Inc. has a beta of 3.15. If the market return is expected to be 10 percent and the risk-free rate is 3.5 percent, what is Nanometrics required return
Answer:
23.975%
Explanation:
Calculation for Nanometrics required return
Using this formula
Required return = Risk free rate + (Beta*(Market rate - Risk free rate))
Where,
Risk free rate =3.5%
Beta=3.15%
Market rate =10%
Let plug in the formula
Required return = 3.5% +(3.15*(10%-3.5%)
Required return = 3.5% +(3.15*6.5%)
Required return = 3.5% + 20.475%
Required return = 23.975%
Therefore Nanometrics required return will be 23.975%
Holt Enterprises recently paid a dividend, D0, of $3.50. It expects to have nonconstant growth of 12% for 2 years followed by a constant rate of 6% thereafter. The firm's required return is 18%. How far away is the horizon date
Answer:
At the end of the year 2
Explanation:
In order to compute the share of Holt enterprises, we require dividends in years 1 and 2 dividends which are shown thus:
Year 1 dividend=$3.50*(1+12%)^1=$ 3.92
Year 2 dividend=$3.50*(1+12%)^2=$4.3904
Horizon value at the end of year 2=year 2 dividend *(1+constant dividend growth rate)/(required return-constant dividend growth rate)
Horizon value is computed at the end of year 2 since it needs to follow the last dividend paid immediately
Suppose 17 pesos can be exchanged for $1. A Mexican businessman is interested in buying a home in Texas. If the price of the home in Texas is $200,000, how many Mexican pesos must he have to buy this home
Answer:
Total cost in pesos= $3,400,000
Explanation:
Giving the following information:
One dollar= $17 pesos
Total cost of the house= $200,000 dollars
To calculate the total cost in Mexican pesos, we need to multiply the exchange rate by the total cost in dollars.
Total cost in pesos= 200,000*17
Total cost in pesos= $3,400,000
McDonalds reported current year pretax book income of $365,000. Included in the computation were favorable temporary differences of $13,750, unfavorable temporary differences of $97,000, and unfavorable permanent differences of $45,000. McDonalds' current income tax expense or benefit would be
Answer:
the current income tax expense or benefit is $103,583
Explanation:
The computation of the current income tax expense or benefit is shown below:
Current income tax expense is
= (pre - tax book income - favourable temporary difference + unfavorable temporary difference + unfavourable permanent difference) × tax rate
= ($365,000 - $13,750 + $97,000 + $45,000) × 21%
= $493,250 × 21%
= $103,583
We assumed the tax rate be 21%
hence, the current income tax expense or benefit is $103,583
Costco is an example of _______ warehouse. Group of answer choices Hub and spoke system Assortment Spot stock Break bulk
Answer:
Hub and spoke system
Explanation:
Costco Wholesale Corporation is a company that operates in the warehouse industry. They store merchandise at a lower cost than other wholesale or retail sources.
They aim to reduce warehousing cost for small and medium scale businesses.
In the hub and spoke system each component of the warehousing system are independent and contribute to the central warehousing activity.
It is also called the master feeder structure.
Freight traffic is moved to the central hub through spokes that are arranged around the centre like a wheel.
This system reduces the travel time and therefore is more efficient with lower cost
Suppose Carla has $7000 to invest. Which investment yields the greater return over 4 years: 7% compounded quarterly or 6.85% compounded monthly
Answer:
The option with the quarterly compounding provides a higher future value.
Explanation:
Giving the following information:
Initial investment= $7,000
Number of years= 4 years
To calculate the future value, we need to use the following formula:
FV= PV*(1+i)^n
Quarterly compounding:
Interest rate (i)= 0.07/4= 0.0175
n= 4*4= 16
FV= 7,000*(1.0175^16)
FV= $9,239.51
Monthly compounding:
i= 0.0685/12= 0.00571
n= 4*12= 48
FV= 7,000*(1.00571^48)
FV= $9,200.07
The option with the quarterly compounding provides a higher future value.
E-Eyes just issued some new preferred stock. The issue will pay an annual dividend of $27 in perpetuity, beginning 16 years from now. If the market requires a return of 4.1 percent on this investment, how much does a share of preferred stock cost today?
Answer:
$360.43
Explanation:
Calculation for how much does a share of preferred stock cost today
First step is for us to calculate the price of the stock in Year 15 which is a year before the first dividend payment.
P15= $27 / .041
P15= $658.54
Last step is to calculate for the price of the stock today
P0= $658.54/ (1+.041)^15
P0= $658.54/ (1.041)^15
P0=$360.43
Therefore the amount that a share of preferred stock cost today will be $360.43
Bigelow has a levered cost of equity of 14.29% and a pretax cost of debt of 7.23%. The required return on the assets is 11%. What is the firm's debt-equity ratio based on MM Proposition II with no taxes?
Answer:
0.873
Explanation:
Given that
Cost of equity, RS = 14.29% = 0.1429
Required return on assets = 11% = 0.11
Cost of debt = 7.23% = 0.0723
Then we can calculate the firm's debt equity ratio by using the relation
0.1429 = 0.11 + B/S(0.11 - 0.0723)
0.1429 = 0.11 + B/S(0.0377)
B/S(0.0377) = 0.1429 - 0.11
B/S(0.0377) = 0.0329
B/S = 0.0329 / 0.0377
B/S = 0.873
Therefore, the debt equity ratio is 0.873
Brown Industries has a debt-equity ratio of 1.5. Its WACC is 9.6 percent, and its cost of
debt is 5.7 percent. There is no corporate tax.
What is the company's cost of equity capital? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal
places, e.g., 32.16.)
b-1. What would the cost of equity be if the debt-equity ratio were 2.0? (Do not round
intermediate calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
b-2. What would the cost of equity be if the debt-equity ratio were 0.5? (Do not round
intermediate calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
b-3. What would the cost of equity be if the debt-equity ratio were zero? (Do not round
intermediate calculations and enter your answer as a percent rounded to 2
decimal places, e.g., 32.16.)
Answer:
A .Unlevered cost of equity = 9.6
b-1 Levered cost of equity = 28.69
b-2 Levered cost of equity = 14.37
b-3 Levered cost of equity = 9.6
Explanation:
A. First step is to calculate the E/A
D/A = D/(E+D)
D/A = 1.5/(1+1.5)
D/A=0.6
E/A = 1-D/A
E/A=1-0.6
E/A=0.4
Second Step is to calculate WACC using this formula
WACC = Levered cost of equity*E/A+Cost of debt*(1-tax rate)*D/A
Let plug in the formula
0.096= Levered cost of equity*=0.4+0.057*(1-0)*=0.6
Levered cost of equity =15.45%
Third step is to calculate UnLevered cost of equity using this formula
Levered cost of equity = Unlevered cost of equity+D/E*( Unlevered cost of equity-cost of debt)*(1-tax rate)
Let plug in the formula
0.1545 = Unlevered cost of equity+1.5*(Unlevered cost of equity-0.057)*(1-0)
Unlevered cost of equity = 9.6
b-1. Calculation for What would the cost of equity be if the debt-equity ratio were 2.0
Using this formula
Levered cost of equity = Unlevered cost of equity+D/E*( Unlevered cost of equity-cost of debt)*(1-tax rate)
Let plug in the formula
Levered cost of equity = 9.6+2*(9.6-0.057)*(1-0)
Levered cost of equity = 28.69
b-2. Calculation for What would the cost of equity be if the debt-equity ratio were 0.5
Using this formula
Levered cost of equity = Unlevered cost of equity+D/E*( Unlevered cost of equity-cost of debt)*(1-tax rate)
Let plug in the formula
Levered cost of equity = 9.6+0.5*(9.6-0.057)*(1-0)
Levered cost of equity = 14.37
b-3. Calculation for What would the cost of equity be if the debt-equity ratio were zero
Using this formula
Levered cost of equity = Unlevered cost of equity+D/E*( Unlevered cost of equity-cost of debt)*(1-tax rate)
Let plug in the formula
Levered cost of equity = 9.6+0*(9.6-0.057)*(1-0)
Levered cost of equity = 9.6
The town of Smallsville is considering building a museum. The interest on the money Smallsville will have to borrow to build the museum will be $1,000 per year. Each citizen's marginal benefit from the museum is shown in the following table, and this marginal benefit schedule is public information.
Citizen Marginal benefit from museum ($/year)
Anita…………………………. 340
Brandon…………………………. 290
Carlena…………………………. 240
Dallas…………………………. 190
Eloise…………………………. 140
a. Assuming each citizen voted his or her private interests, would a referendum to build the museum and raise each citizen's annual taxes by $200 pass?
b. A citizen proposes that the city let a private company build the museum and charge the citizens a lump-sum fee each year to view it as much as they like. Only citizens who paid the fee would be allowed to view the museum. If the private company were allowed to set a single fee, would any company offer to build the museum?
c. A second citizen proposes allowing the private company to charge different prices to different citizens and auctioning the right to build the museum to the highest bidding company. Again, only the citizens who pay the fee may view the museum. What is the highest bid a private company would make to supply the museum to Smallsville?
Answer: See explanation
Explanation:
a. This has been solved and attached.
Note that the net benefits was calculated as:
= Marginal benefit - $200
b. Looking at the table and information provided in the attachment, we would see that no company offer to build the museum because since their cost of $1000 can't be covered by the revenue generated. The highest revenue gotten for the single price monopolist is $760 and this can't even cover their cost.
c. Based on the scenario given in (c), the highest revenue the price discriminating monopolist would make is $1200 and coupled with the fact that the cost is $1000, the maximum bid that a private company would make to supply the museum to Smallsville is $200 ($1200 - $1000)
a. Assuming that each citizen voted their private interests, a referendum to build the museum and raise each citizen's annual taxes by $200 would pass because 3/5 (60%) of the citizens would vote in favor. They derive more marginal benefit than the head tax increase from the museum project.
b. No company would likely offer to build the museum based on a single lump-sum fee because the marginal benefits derived by the five citizens are not equal nor more than $200 each. If the private company charges above $140, not all the citizens would be willing to pay.
c. The highest bid a private company would make to supply the museum to Smallsville is $100,000. This cost is based on a 10% annual interest ($1,000/10% x 10 years) for ten years.
Thus, given the facts of the case, it would be more beneficial for the town of Smallsville to borrow $100,000 to build the museum and raise the annual tax by $200 to enable the citizens to enjoy the services of the museum while the town recovers the investment costs plus interests on the borrowed funds over time.
Data and Calculations:
Cost of Annual Interest Expense = $1,000
Citizens Marginal Net Accumulated
Benefit Benefit Net Benefit
Anita $340 $140 ($340 - $200) $140 ($0 + $140)
Brandon $290 $90 ($290 - $200) $230 ($140 + $90)
Carlena $240 $40 ($240 - $200) $270 ($230 + $40)
Dallas $190 ($10) ($190 - $200) $260 ($270 - $10)
Eloise $140 ($60) ($140 - $200) $200 ($260 - $60)
Total $1,200
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The demand for cooldrink is price elastic if
Answer:
see below
Explanation:
Elastic demand describes a scenario where a small change in price results in a significant difference in the quantity demanded. The term 'elastic ' suggests a moving or a stretching demand. Goods that have many substitutes have an elastic demand.
A product or service will have an elastic demand when a small price change greatly affects consumption. Customers will still seek alternative cheaper options if the price increases, which causes demand to drop significantly. The demand for cooldrink is price elastic if a small change in price results in demand changing considerably.
10. Do you think engaging in organic farming is an example of corporate citizenship? Why?
Answer:
The global population is growing rapidly causing a rise in demand for sustainable food production.
Explanation:
Kyle actively participates in the rental of a home he owns. Kyle's AGI for the year is $75,000. He has a loss from his rental property of $20,000. How much of the loss can Kyle deduct on his income tax return this year
Answer:
Kyle can deduct $20,000 loss from his income tax return this year.
Explanation:
a) Data:
Kyle's AGI = $75,000
Rental property loss = $20,000
Maximum AGI for maximum loss deduction of $25,000 = $100,000
This is because Kyle's adjusted gross income (AGI) is less than $100,000. The maximum loss deductible for rental income is $25,000.
b) The federal tax law allows for a rental income loss deduction to taxpayers who own and rent property in the U.S. The law stipulates that up to $25,000 may be deducted as a real estate loss per year as long as the individual's adjusted gross income is $100,000 or less.
PLEASE HELP!!! Compare U.S. government savings bonds to mutual funds and collectibles in terms of risk and potential return. Explain why these investments are categorized as they are.
Answer:
.......
Explanation:
...................
Carly’s Clips charges for their grooming services based on the following:________.
Direct labor rate $ 62 per hour
Materials markup 30 %
Using time and materials pricing, what is the total price for a job requiring 3 direct labor hours and $54 of materials?
Answer: $256
Explanation:
Using time and materials pricing, the total price for a job requiring 3 direct labor hours and $54 of materials will be calculated as:
Materials = $54
Add: Materials markup = 30% × $54 = 0.3 × $54 = $16.2 = $16
Add: Labour = 3 × $62 = $186
Total price of job = $256
A market that has a single supplier of a product with no close substitutes and barriers to entry is:________
a. an oligopoly.
b. monopolistically competitive.
c. a pure monopoly.
Answer:
c. a pure monopoly.
Explanation:
A monopoly is a market structure which is typically characterized by a single-seller who sells a unique product in the market by dominance. This ultimately implies that, it is a market structure wherein the seller has no competitor because he is solely responsible for the sale of unique products without close substitutes. Any individual that deals with the sales of unique products in a monopolistic market is generally referred to as a monopolist.
For example, a public power company is an example of a monopoly because they serve as the only source of power utility provider to the general public in a society.
Additionally, a public power company refers to a company that provides power (electricity) utility to the general public of a society.
Hence, a market that has a single supplier of a product with no close substitutes and barriers to entry is a pure monopoly.
Jarvis is a coffee farmer who wants to hedge his entire coffee crop that will be harvested by September. The December coffee contract (which consists of 37,500 pounds of coffee) is trading at $2.00 per pound, which the farmer views as a profitable price. To hedge the entire crop, which is expected to weigh 150,000 pounds, at the best price, Jarvis should:
Answer: Sell four December coffee future contracts at $2.00 per pound
Explanation:
Based on the scenario in the question, the number of contracts that is required for hedging the entire crop will be gotten by dividing the total number of crops by the pounds that are available in one contract. This will be:
= 150,000/37,500
= 4 contracts
Therefore, the answer will be for Jarvis to sell four December coffee future contracts at $2.00 per pound
The Domestic Supply and Demand for SUVs in the United States. Suppose the world price equals $50,000 and there is free trade. The United States would _____ SUVs
Answer: export 6 million
Explanation:
The Export of the United sites, which is the export( movement) of goes and services to other countries either by cargo or air freight, and traded or sold.
Another example of export is America’s shipping Automobiles to other countries for sale. The sales of SUV’s in export would be 6 million. Another example of export is the United States exportation of soya beans.
Floyd Industries stock has a beta of 1.20. The company just paid a dividend of $.50, and the dividends are expected to grow at 6 percent per year. The expected return on the market is 11 percent, and Treasury bills are yielding 5.9 percent. The most recent stock price for the company is $76.
Required:
a. Calculate the cost of equity using the DDM method.
b. Calculate the cost of equity using the SML method.
Answer:
a.
r = 0.06697 or 6.697% rounded off to 6.70%
b.
r = 0.1202 or 12.02%
Explanation:
a.
Using the constant growth model of dividend discount model, we can calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,
P0 = D0 * (1+g) / (r - g)
Where,
D0 * (1+g) is dividend expected for the next period /year g is the growth rate r is the required rate of return or cost of equity
Plugging in the values for P0, D0 and g in the formula, we can calculate the value of r to be,
76 = 0.5 * (1+0.06) / (r - 0.06)
76 * (r - 0.06) = 0.53
76r - 4.56 = 0.53
76r = 0.53 + 4.56
r = 5.09 / 76
r = 0.06697 or 6.697% rounded off to 6.70%
.
Using the CAPM, we can calculate the required/expected rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.
The formula for required rate of return under CAPM is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free rate
rM is the market return
r = 0.059 + 1.2 * (0.11 - 0.059)
r = 0.1202 or 12.02%
which value of a makes this investor indifferent between the risky portfolio and the risk-free asset
Answer: 8
Explanation:
Expressing the value of A that would equate the risk-free rate to the risky portfolio is;
0.06 = 0.15 − A/2(0.15)²
0.06 - 0.15 = -0.01125 * A
A = (0.06 - 0.15) / -0.01125
A = 8
With A being 8, the investor would be indifferent between the risk free asset and the risky portfolio according to their utility function.
The EU began as a common market for Multiple Choice the coal and steel industries. the transportation industries. the textile and dairy industries. all imported goods from beyond Europe.
Answer:
The answer is "The coal and steel industries".
Explanation:
In compliance with the terms of the 1975 Constitutional Act, on 5 June 1975, the UK promised a Vote on Inclusion in the European Union, often alluded to as the Vote on the European Union, the Single Market Vote as the EEC Participation referendum to measure support.
This Group established its Council of Europe Coal and Steel Community, that consolidated free flow of coal and steel as well as the freedom of access to sources of production in 6 countries.
Many U.S. firms prefer to sell in Canada, England, and Australia-rather than in larger markets such as Germany and France-because they feel more comfortable with the languages, laws, and culture, which reflect the ________ between these countries and the United States.
a. self-serving bias
b. coincident development
c. psychic proximity
d. cognitive dissonance
e. backward invention
Answer: psychic proximity
Explanation:
The above scenario in the question reflects the psychic proximity between the countries and the United States.
In international business, psychic proximity simply has to do with the national differences between countries which influences a country's perception towards another country.
Therefore, the correct option is C.