Which relationship BEST illustrates a comparison of absolute advantage and comparative advantage? A) A country with an absolute advantage will always have a comparative advantage in producing products. B) A country with a comparative advantage can produce a greater output of a products than a country with an absolute advantage. C) A country with an absolute advantage can produce a product at a lower opportunity cost than a country with a comparative advantage in producing all products. D) A country with a comparative advantage can produce a product at a lower opportunity cost, even if another country has an absolute advantage in the production of all goods.

Answer:

Alpha for A is 1.40%; Alpha for B is -0.2%.

Explanation:

First, we use the CAPM to calculate the required returns of the two portfolios A and B given the risks of the two portfolios( beta), the risk-free return rate ( T-bill rate) and the Market return rate (S&P 500) are given.

Required Return for A: Risk-free return rate + Beta for A x ( Market return rate - Risk-free return rate) = 5% + 0.7 x (13% - 5%) = 10.6%;

Required Return for A: Risk-free return rate + Beta for B x ( Market return rate - Risk-free return rate) = 5% + 1.4 x (13% - 5%) = 16.2%;

Second, we compute the alphas for the two portfolios:

Portfolio A: Expected return of A - Required return of A = 12% - 10.6% = 1.4%;

Portfolio B: Expected return of B - Required return of B = 16% - 16.2% = -0.2%.

Answer: Total supply of sugar = 30,000 + 400P

Explanation:

Given that,

Domestic demand for sugar: Qd = 40,000 − 200P

Domestic supply for sugar: QSD = 10,000 + 300P

Foreign supply: QSF = 20,000 + 100P

Total supply of sugar = Domestic supply + Foreign supply

                                    = QSD + QSF

                                    = 10,000 + 300P + 20,000 + 100P

                                    = 30,000 + 400P

Therefore,

Total supply of sugar = 30,000 + 400P

Answer:

The price of the stock today or the price at which the stock should sell today is $61.30

Explanation:

The price of the stock today can be calculated using the Dividend Discount Model approach which values a stock based on the present value of the expected future dividends from the stock. The price of this stock will be,

P0 = 3.15 * (1+0.2) / (1+0.12)  +  3.15  * (1+0.2) * (1+0.15)  /  (1+0.12)^2  +  

3.15 * (1+0.2) * (1+0.15) * (1+0.1) / (1+0.12)^3  +  

[(3.15 * (1+0.2) * (1+0.15) * (1+0.1) * (1+0.05) / (0.12 - 0.05))  / (1+0.12)^3]

P0 = $61.296 rounded off to $61.30

Answer:

WACC = 7.55 %

so correct option is A) 7.55%

Explanation:

given data

company raised = $100,000,000

sale of bonds = $50,000,000

current yield = 8%

sale of common stock = $25,000,000

cost equal = 9%

sale of preferred stock =$25,000,000

cost equal = 10%

tax rate = 30%

to find out

WACC

solution

we get here WACC that is express as

WACC = ( Weight of debt × After tax cost of debt) + (Weight of equity × Cost of equity) + (Weight of preferred stock × cost of preferred stock)   ..................1

and cost of debt after tax will be

cost of debt after tax = 8% of ( 1 - 30%)

cost of debt after tax = 5.6%

and Weight of debt = = 0.50

and Weight of equity =   = 0.25

and Weight of preferred stock = = 0.25

so WACC = ( 0.50 × 0.056 ) +  ( 0.25 × 0.09 ) +  ( 0.25 × 0.10 )

WACC = 0.0755

WACC = 7.55 %

so correct option is A) 7.55%

Answer:

$400 billion

Explanation:

The computation on the impact on total checkable deposits is shown below

= Increased in the bank reservce ÷ reserve requirement

= $60,000,000,000 ÷ 15%

= $400 billion

Therefore the impact on the total checkable deposits in the case when the bank reserves rises is $400 billion

We simply applied the above formula so that the correct value could come

And, the same is to be considered