Answer:
10.69%
Explanation:
Market risk premium = 5.77% or 0.0577
The beta = 1.42
Risk free rate = 2.5% or 0.025
Cost of equity = Risk free rate + Beta*Market risk premium
Cost of equity = 0.025 + 1.42*0.0577
Cost of equity = 0.025 + 0.081934
Cost of equity = 0.106934
Cost of equity = 10.69%
The costs of bringing a corporation into existence, including legal fees and promoter fees, are called:
Answer:
organization expenses.
Explanation:
A corporation can be defined as a corporate organization that has facilities and owns or controls assets used for the production of goods and services in at least one country other than its headquarter (home office) located in its home country.
This ultimately implies that, a corporation is a corporate organization that owns or controls its business in two or more countries.
Some examples of multinational firms are Ap-ple, Volkswagen, G-oogle, Shoprite, Nestlé, Accenture, Shell BP, Chevron etc.
The costs of bringing a corporation into existence, including legal fees and promoter fees, are called organization expenses.
Depreciation on equipment for the year is $5,640.
Journalize the transaction if the company prepares adjustments once a year.
(a) Record the journal entry if the company prepares adjustments once a year.*
(b) Record the journal entry if the company prepares adjustments on a monthly basis.*
*Refer to the Chart of Accounts for exact wording of account titles.
Chart of Accounts
CHART OF ACCOUNTS
General Ledger
ASSETS
11 Cash
12 Accounts Receivable
13 Supplies
14 Prepaid Insurance
16 Equipment
17 Accumulated Depreciation-Equipment
LIABILITIES
21 Accounts Payable
22 Notes Payable
23 Unearned Fees
24 Wages Payable
25 Interest Payable
EQUITY
31 Common Stock
32 Retained Earnings
33 Dividends
REVENUE
41 Fees Earned
EXPENSES
51 Advertising Expense
52 Insurance Expense
53 Interest Expense
54 Wages Expense
55 Supplies Expense
56 Utilities Expense
57 Depreciation Expense
59 Miscellaneous Expense
General Journal
(a) Record the journal entry on December 31, if the company prepares adjustments once a year.*
(b) Record the journal entry on December 31, if the company prepares adjustments on a monthly basis.*
*Refer to the Chart of Accounts for exact wording of account titles.
PAGE 1
JOURNAL
DATE DESCRIPTION POST. REF. DEBIT CREDIT
1
2
3
4
Answer:
a.
Date Account Title Debit Credit
XX-XX-XXX Depreciation Expense $5,640
Accumulated Depreciation $5,640
b.
Date Account Title Debit Credit
XX-XX-XXX Depreciation Expense $470
Accumulated Depreciation $470
Working
Monthly depreciation = Annual depreciation / 12 months
= 5,640 / 12
= $470
what is balance of trade and balance of payment?
Answer:
the difference in value between a country's imports and exports.
is an accounting of a country's international transactions for a particular time period.
Which of the following methods of accounting for investments is appropriate when the investor has significant influence over the investee?
a. cost method.
b. mark to market method.
c. equity method.
d. lower of cost or market method.
Answer:
The answer is "Option c".
Explanation:
The equity method is indeed the conventional technique used whenever an investor, a firm, has a massive effect on some other asset manager.
It is the method used by a company to document its money generated through investment in another company.
The investor should record its profits or losses following its ownership percentage. It regularly changes the value of the property to a balance sheet of even an investor.
A bailment is different from a gift because:___.
a. a gift requires consideration, but a bailment does not.
b. a gift is always a contract, but a bailment is generally not a contract.
c. a gift requires delivery, but a bailment does not.
d. in a bailment, only possession of the property is transferred to the bailee, whereas with a gift, both possession and ownership must pass to the donee.
Answer: d. in a bailment, only possession of the property is transferred to the bailee, whereas with a gift, both possession and ownership must pass to the donee.
Explanation:
When you give a person a gift, you are giving the person both ownership of that gift and the possession as well. For instance, if you give a person a car as a gift, that person now owns the car and will use it as they please.
With a bailment, there is no transfer of ownership. The bailor is simply giving the bailee possession of the property in question which means that after the bailee is done with the property, they have to return it back to the bailor.
Walters manufactures a specialty food product that can currently be sold for $21.50 per unit and has 19,500 units on hand. Alternatively, it can be further processed at a cost of $11,500 and converted into 11,500 units of Deluxe and 5,500 units of Super. The selling price of Deluxe and Super are $31.50 and $19.50, respectively. The incremental net income of processing further would be:
Answer:
the incremental net income of processing further is $38,750
Explanation:
The computation of the incremental net income of processing further is given below:
= (11,500 units × $31.50 + 5,500 units × $19.50 - $11,500) - ($19,500 × $21.50)
= ($362,250 + $107,250 - $11,500) - $419,250
= $38,750
Hence, the incremental net income of processing further is $38,750
The partners share profits and losses in the ratio of 5:3:2, respectively. The partners agreed to dissolve the partnership after selling the other assets for $50,000. On dissolution of the partnership, Janet should receive:
Answer:
$30,000
Explanation:
The computation of the amount received by Janet is given below:
Loss on sale of other assets is
= $150,000 - $50,000
= $100,000
Share of Janet in loss is
= $100,000 × 5 ÷ 10
= $50,000
So,
Janet revised capital balance is
= $80,000 - $50,000
= $30,000
If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Triple Sevens from rooms per night to rooms per night. Therefore, the income elasticity of demand is , meaning that hotel rooms at the Triple Sevens are
Answer:
Therefore, the income elasticity of demand is 0.83, meaning that hotel rooms at the Triple Sevens are normal goods and necessities.
Explanation:
Note: This question is not complete as some data in it are missing. The complete question is therefore provided before answering the question as follows:
If average household income increases by 20%, from $50,000 to $60,000 per year, the quantity of rooms demanded at the Triple Sevens rises from 300 rooms per night to 350 rooms per night. Therefore, the income elasticity of demand is __________, meaning that hotel rooms at the Triple Sevens are__________.
The explanation of the answer is now provided as follows:
Percentage change in income = 20%
Percentage change in quantity of rooms demanded = ((350 - 300) / 300) * 100 = 16.67%
Income elasticity of demand = Percentage change in quantity of rooms demanded / Percentage change in income = 16.67% / 20% = 0.83
Since the income elasticity of demand is positive but less than one, this implies that hotel rooms at the Triple Sevens are normal goods and necessities.
Therefore, the income elasticity of demand is 0.83, meaning that hotel rooms at the Triple Sevens are normal goods and necessities.
If the efficient market hypothesis is true, price changes are independent and biased. Group of answer choices
Answer:
Price changes are independent but not biased in efficient market hypothesis.
Explanation:
In simple words, the efficient-market hypothesis asserts that asset prices represent all relevant knowledge. Because market rates must only respond to fresh knowledge it is difficult to continuously "beat the market" on something like a risk-adjusted approach.
Thus the given statement is partially true.
what are the characteristics of effective communication
Answer:
Clear—main ideas easily identified and understood.
Concise—gets to the point without using unneeded words or images.
Concrete—includes specific examples or explanations.
Correct—in information, word choice, and grammar.
Coherent—information presented in a logical sequence.
Completeness. Effective communications are complete, i.e. the receiver gets all the information he needs to process the message and take action. ...
Conciseness. Conciseness is about keeping your message to a point. ...
Consideration. ...
Concreteness. ...
Courtesy. ...
Clearness. ...
Correctness.
Explanation:
Hope this helps.
Which of the following is part of the generally accepted account of the 1822 conspiracy led by Denmark Vesey?A. His lieutenant was named Cinque. B. Vesey and his followers killed or maimed 37 whites. C. Vesey studied the Magna Carta and quoted the Farmer's Almanac.D. Vesey had purchased his freedom after winning the lottery.
Answer: D. Vesey had purchased his freedom after winning the lottery.
Explanation:
Denmark Vasey was a African American leader in the early 19th century who was born into slavery but was able to buy his freedom when he won a lottery.
In 1822, he was accused of a conspiracy to organize a slavery revolt that would have seen thousands of African Americans killing slave owners in South Carolina and then sailing to Haiti. They had him executed at the age of 55 for this alleged crime.
Navajo Corporation traded a used truck (cost $20,000, accumulated depreciation $18,000) for a small computer with a fair value of $3,300. Navajo also paid $500 in the transaction. Prepare the journal entry to record the exchange. (The exchange has commercial substance.)
Answer and Explanation:
The journal entry is given below:
Equipment/Computer $3,300
Accumulated depreciation-Truck $18,000
To Truck $20,000
To Gain on disposal of truck $800
To Cash $500
(Being the exchange is recorded)
Here the equipment and accumulated depreciation is debited as it increased the asset and credited the truck, cash and gain as it decreased the assets and increased the revenue
The following account balances are taken from the December 31, 2018, financial statements of ABZ Advertising Company. The company uses accrual basis accounting.
Advertising Revenue $46,982
Cash 41,516
Accounts Receivable 7,296
Interest Expense 2,299
Accounts Payable 5,000
Operating Expenses 37,460
Deferred Revenue 1178
Equipment 18,648
Income Tax Expense 2,326
The following activities occurred in 2019:
1. Performed advertising services on account, $55,000.
2. Received cash payments from customers on account, $10,400.
3. Received deposits from customers for advertising services to be performed in 2020, $2,500.
4. Made payments to suppliers on account, $7,000.
5. Incurred $45,000 of operating expenses; $39,000 was paid in cash and $6,000 was on account and unpaid as of the end of the year.
Required:
What is the amount of revenue that will be reported on the income statement for the year ended December 31, 2019?
Answer:
the amount of the revenue that should be recorded is $51,896
Explanation:
The computation of the amount of the revenue that should be recorded is shown below:
= Opening balance of account receivable + service revenue balance on the account - cash payment
= $7,296 + $55,000 - $10,400
= $51,896
Hence, the amount of the revenue that should be recorded is $51,896
Jack asked Jill to marry him, and she has accepted under one condition: Jack must buy her a new $ Rolls-Royce Phantom. Jack currently has $ that he may invest. He has found a mutual fund with an expected annual return of % in which he will place the money. How long will it take Jack to win Jill's hand in marriage?
Answer: 47.8 years
Explanation:
Jack is trying to make up to $330,000 from $50,680 at a rate of 4%.
The relevant formula is the future value formula as Jack is trying to get to a certain amount in future:
330,000 = 50,680 * ( 1 + 4%) ^ number of years
1.04 ^ number of years = 330,000 / 50,680
1.04 ^ N = 6.51144435674822
Use the natural logarithm:
N * In (1.04) = In (6.51144435674822)
N * 0.039220713153281 = 1.873561299007586979
N = 1.873561299007586979 / 0.039220713153281
= 47.8 years
The three categories of manufacturing costs comprising the cost of work in process are direct labor, direct materials, and: __________
a) direct expenses
b) indirect expenses
c) factory overhead
d) sales salaries expense
Answer:
C)) factory overhead
Explanation:
Manufacturing cost can be regarded as the sum of all the costs resources that is been consumed during the process of making a product. manufacturing cost can be classified as;
✓direct materials cost
✓ manufacturing overhead.
✓direct labor cost
It can be regarded as factor in total delivery cost. Direct Material Cost can be regarded as total cost that is incurred in purchasing of raw material and cost of other components such as packaging, as well as freight and storage costs by the company
It should be noted that The three categories of manufacturing costs comprising the cost of work in process are direct labor, direct materials, and factory overhead.
Tyler Tooling Company uses a job order cost system with overhead applied to products on the basis of machine hours. For the upcoming year, the company estimated its total manufacturing overhead cost at $420,000 and total machine hours at 60,000. During the first month of operations, the company worked on three jobs and recorded the following actual direct materials cost, direct labor cost, and machine hours for each job: Job 101 Job 102 Job 103 TotalDirect materials used 19,200 14,400 9,600 43,200 Direct labor 28,800 11,200 9,600 49,600 Machine hours 1,000 hours 4,000 hours 2,000 hours 7,000 hoursJob 101 was completed and sold for $60,000.Job 102 was completed but not sold.Job 103 is still in process.Actual overhead costs recorded during the first month of operations totaled $45,000.Required: 1. Calculate the predetermined overhead rate. (Round your answer to 2 decimal places.)2. Compute the total manufacturing overhead applied to the Work in Process Inventory account during the first month of operations. (Round your intermediate calculations to 2 decimal places.)3. Compute the balance in the Work in Process Inventory account at the end of the first month. (Round your intermediate calculations to 2 decimal places.)4. How much gross profit would the company report during the first month of operations before making an adjustment for over- or underapplied manufacturing overhead? (Round your intermediate calculations to 2 decimal places.)5-a. Determine the balance in the Manufacturing Overhead account at the end of the first month. (Round your intermediate calculations to 2 decimal places.)
Answer:
Tyler Tooling Company
1. The predetermined overhead rate is:
= $7
2. The total manufacturing overhead applied to the Work in Process Inventory account during the first month of operations is:
= $49,000
3. The balance in the Work in Process Inventory account at the end of the first month is:
= $86,800
4. The gross profit that the company would report during the first month of operations before making an adjustment for over- or underapplied manufacturing overhead is:
= $5,000
5a. The balance in the Manufacturing Overhead account at the end of the first month is:
= $4,000 overapplied
Explanation:
a) Data and Calculations:
Estimated total manufacturing overhead for the coming year = $420,000
Estimated total machine hours for the coming year = 60,000 mh
Actual jobs data: Job 101 Job 102 Job 103 Total
Direct materials cost $19,200 $14,400 $9,600 $43,200
Direct labor cost 28,800 11,200 9,600 49,600
Machine hours cost 1,000 4,000 2,000 7,000
Sale of Job 101 = $60,000
Actual overhead for the first month = $45,000
1. Predetermined overhead rate = Estimated overhead/estimated machine hours
= $420,000/60,000
= $7
2. The total manufacturing overhead applied to the Work in Process Inventory account during the first month of operations is:
= total machine hours used * $7
= $49,000 (7,000 * $7)
3. The balance in the Work in Process Inventory account at the end of the first month is:
Work in Process
Account Titles Debit Credit
Direct materials $43,200
Direct labor 49,600
Overhead applied 49,000
Cost of Job 1 sold $55,000 ($19,200+$28,800+$7,000)
Ending balance $86,800 (= costs of Job 102 and 103)
4. The gross profit that the company would report during the first month of operations before making an adjustment for over- or underapplied manufacturing overhead is:
= Gross profit for Job 101 = $5,000 ($60,000 - $55,000)
5a. The balance in the Manufacturing Overhead account at the end of the first month is:
= Actual overhead incurred - overhead applied
= $45,000 - $49,000
= $4,000 overapplied
Which Company/Security report would be best for someone looking to compare a company to its peers in a single display
Which Company/Security report would be best for someone looking to compare a company to its peers in a single display is Comps.
In short, locating comps involves searching out current income of homes as similar to your very own belongings as viable, then evaluating your own home to them and adjusting your rate to account for the differences.
Comparable (comps) are utilized in valuations in which a currently offered asset is used to decide the price of a comparable asset. Comparable, regularly utilized in actual property to discover the honest price of a domestic, are a listing of latest asset income that replicate the traits of the asset and proprietor is seeking to promote.
Simply put, actual property comparable – or “comps” – are similar houses in a selected place that you are looking to shop for or promote in. Comps are used to decide the price of a domestic through evaluating it to comparable houses offered withinside the equal community or in a place as near as viable to the residence being valued.
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Rediger Inc. a manufacturing company, has provided the following data for the month of June. The balance in the Work in Process inventory account was $22,000 at the beginning of the month and $17,000 at the end of the month. During the month, the company incurred direct materials cost of $55,000 and direct labor cost of $28,000. The actual manufacturing overhead cost incurred was $53,000. The manufacturing overhead cost applied to jobs was $51,000. The cost of goods manufactured for June was: _________.
a. $141,000
b. $139,000
c. $134,000
d. $136,000
Answer:
b. $139,000
Explanation:
The cost of goods manufactured is the total costs incurred in the month of June in producing goods which comprise direct costs of labor, direct materials,factory overhead and so on shown in the attached excel file.
Rediger Inc.
Cost of goods manufactured schedule
Direct materials purchased $55,000
Direct labor $28,000
Total direct costs $83,000
factory overhead $51,000
Total manufacturing costs $134,000
Work in process 1/1 $22,000
Work in process 12/31 ($17,000)
Cost of goods manufactured $139,000
The discount rate that makes the present value of a bond's payments equal to its price is termed the:
Coupon rate is the rate of discount that makes the present value of a bond's payments equal to its price.
Basically, the discount rate means the interest rate used to get P.V. of future cash flows in a discounted cash flow (DCF).
The coupon rate refers to the interest rate paid by bond-issuers on the bond's face value.
Hence, the Coupon rate is the rate of discount that makes the present value of a bond's payments equal to its price.
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CompuTop Company sells toy laptop computers for $30 each. If the variable cost for each laptop is $20 and fixed costs total $25,000, how much sales in dollars must it sell to generate a target income of $66,667
Answer:
the sales in dollars sell to generate the target income is $183,334
Explanation:
The computation of the sales in dollars sell to generate the target income is shown below:
= (Fixed cost + target income) ÷ (selling price - variable cost) ÷ selling price
= ($25,000 + $66,667) ÷ ($30 - $20) ÷ $20
= $91,667 ÷ 50%
= $183,334
Hence, the sales in dollars sell to generate the target income is $183,334
Based on an examination of the risk and return data for a variety of alternative investments during the period of 1926-2011, which of the following statements is correct? Over the period of 1926-2011, the general trend of increasing riskiness among the following five assets is: U.S. Treasury bills, U.S. government long-term government bonds, long-term corporate bonds, large-company stocks, and small-company stocks. Over the period of 1926-2011, the general trend of increasing return among the following five assets is: U.S. Treasury bills, long-term corporate bonds, U.S. government long-term bonds, large-company stocks, and small-company stocks. Large-company stocks, rather than small-company stocks, exhibit the greater risk and the greater return. Small-company stocks, rather than long-term corporate bonds, exhibit both the greater return and the greater standard deviation.
Answer:
Based on an examination of the risk and return data for a variety of alternative investments during the period of 1926-2011, the correct statement is:
Small-company stocks, rather than long-term corporate bonds, exhibit both the greater return and the greater standard deviation.
Explanation:
Small-company stocks are known to show the highest volatility of returns among these five assets. The reason is that investors in small company stocks always expect higher returns to pay for the higher risks involved in such unproven investments, unlike investing in other assets. In addition, small-company stocks are known to pose higher risks given their known failure to deliver on their promised performance and returns.
A short futures contract on a non-dividend paying stock was entered some time ago. It now has 6 months to maturity. The risk-free rate of interest is 10% per year. The stock is currently trading at $25/share and the delivery price is $24/share. How much is your position worth today (ignore marking to market costs)
Answer:
$26.225
Explanation:
Spot rate amount = $25
Period = 0
FV Period = 6 month. FVF at 5%, 6 month = 1.049
Position worth today = Spot rate amount * FVF
Position worth today = $25 * 1.049
Position worth today = $26.225
So, my position worth today is $26.225.
For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (1), government purchases (G), exports (X), or imports (M). Transaction
i. Andrew's employer upgrades all of its computer systems using U.S.-made parts.
ii. Beth gets a new refrigerator made in the United States Andrewbuys a bottle of Italian wine.
iii. The state of Pennsylvania repaves highway PA 320, which goes through the center of Swarthmore.
iv. Beth's father in Sweden orders a bottle of Vermont maple syrup from the producer's website,
Answer and Explanation:
The classification is as follows:
i. It is an investment as the employer of andrew spent money for upgrading the system so that the productivity could be increased due to this it will give benefits till the long term
ii. It is a consumption as the product is made in US and the same should be consumed in US only
It is a consumption and imports as the andrews purchased the bottle
iii. It is a government spending as the government used the money for creating the infrastructure that should beneficial for the general public
iv. It is an export as father lived in sweden and the maple syrup should be delivered to the foreign party
Curtain Co. paid dividends of $10,000, $12,500, and $14,000 during Year 1, Year 2, and Year 3, respectively. The company had 2,100 shares of 5.5%, $100 par value preferred stock outstanding that paid a cumulative dividend. What is the total amount of dividends paid to common shareholders during Year 3?
A. $4800.B. $1000.C. $2600.D. $800.
Answer:
Total amound paid to shareholder in 3rd year = $1850
Explanation:
Below is the calculation:
Total dividend paid = 1st year divident + 2nd year divident + 3rd year dividend
Total dividend paid = $10000 + 12500 + 14000
Total dividend paid = $36500
Total preferred dividend = (2100 x 100) x 5.5% x 3
Total preferred dividend = $34650
Total amount of dividend paid to shareholder during 3rd year = 36500 - 34650 = $1850
Total amound paid to shareholder in 3rd year = $1850
Sheffield Corp. has a materials price standard of $2.00 per pound. 4900 pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 4900 pounds, although the standard quantity allowed for the output was 4000 pounds. Sheffield Corp.'s materials quantity variance is:_____.
a. $1980 U.
b. $1800 F.
c. $1800 U.
d. $1980 F.
Answer:
a. $1,980 U
Explanation:
We will compute the direct materials quantity variance using the formula below.
Direct materials quantity variance =
(Standard quantity allowed - Actual quantity of materials) × Materials price standard
Fixing in the values, we'll have;
Direct materials quantity variance
= (4,000 pounds - 4,900 pounds) × $2.20 per pound
= -900 pounds × $2.20 per pound
= -$1,980
= $1,980 U
Refer to the following information about the Finishing Department in the Gallagher Factory for the month of June. Gallagher Factory uses the FIFO method of inventory costing.
Beginning Work in Process inventory:
Physical units..... 5000
% complete for materials 70%
% complete for conversion costs 25%
Materials cost from May 7350
Conversion costs from May 3125
Product started:
Physical units 44000
Ending Work in Process inventory:
Physical units 4000
% complete for materials 40%
% complete for conversion costs 10%
Manufacturing costs for June:
Materials 96975
Conversion costs 79470
Compute equivalent units for direct materials for June.
Answer:
the equivalent units for direct material is 43,100 units
Explanation:
The computation of the equivalent units for direct material is shown below:
= Ending work in process units + units started and completed + opening work in process units
= 40% of 4,000 units + (44,000 - 4,000) + 30% of 5,000
= 1,600 units + 40,000 units + 1,500 units
= 43,100 units
hence, the equivalent units for direct material is 43,100 units
A corporate bond with a 6% coupon (paid semiannually) has a yield to maturity of 7.5%. The bond matures in 20 years but is callable at $1050 in ten years. The maturity value is par. Calculate the bond’s yield to call. % terms w/o $ sign. (HINT: Find the current price and then solve for YTC.)
Answer:
Yield to Call = 8.66%
Explanation:
The computation of the yield to call is shown below:
First determine Current Price of Bond,
PV = [FV = 1,000, PMT = 30, N = 40, I = 0.075 ÷2]
PV = $845.87
Callable Price = $1,050
Now
Calculating Yield to Call,
I = [PV = -845.87, FV = 1,050, N = 20, PMT = 30]
I = 8.66%
Yield to Call = 8.66%
What is Company XYZ's intrinsic equity value using the WACC as the discount rate and assuming the terminal value is based on the EBITDA exit multiple
Answer:
$315,198
Explanation:
WACC = [ Equity / Total value ] * cost of equity + [ Debt / Total value ] * Cost of debt.
WACC = 11.5%
Exit multiple = Total cash outflow / Total cash inflow
Exit multiple = $120,000 / 36,000 = 3.3x
EBITDA of the company is $178,412.
$ 485,000 $ 432,000 $Enter a dollar amount Enter percentages rounded to 0 decimal places % Inventory $ 786,000 $ 617,000 $Enter a dollar amount Enter percentages rounded to 0 decimal places % Total assets $3,111,000 $2,707,000 $Enter a dollar amount Enter percentages rounded to 0 decimal places %
Answer:
Accounts receivable
Dec 31, 2017 = $485,000
Dec 31, 2016 = $432,000
Amount = $53,000
Percentage = $53,000/$432,000
Percentage = 0.1226852
Percentage = 12%
Inventory
Dec 31, 2017 = $786,000
Dec 31, 2016 = $617,000
Amount = $169,000
Percentage = $169,000 / $617,000
Percentage = 0.2739060
Percentage = 27%
Total assets
Dec 31, 2017 = $3,111,000
Dec 31, 2016 = $2,707,000
Amount = $404,000
Percentage = $404,000/$2,707,000
Percentage = 0.1492427
Percentage = 15%
Stocks have a 12% expected return and 22% risk. Bonds have a 7% expected return and 10% risk. The expected return of a portfolio comprised of 70% stocks and 30% bonds is: Group of answer choices
Answer:
10.5%
Explanation:
Calculation to determine Expected return of portfolio
Using this formula
Expected return of portfolio = Ws*E(rs) + Wb*E(rb)
Where,
Expected return stock E(rs) = 12%
Expected return bond E(rb) = 7%
Weight of stock Ws = 0.70
Weight of bond Wb = 0.30
Let plug in the formula
Expected return of portfolio= 0.7*12 + 0.3*7
Expected return of portfolio = 10.5%
Therefore Expected return of portfolio is 10.5%
