True or False: Increasing the number of stocks in a portfolio reduces market risk.Consider two stock portfolios. Portfolio B consists of 20 different stocks from firms in different industries. Portfolio A consists of 10 different stocks, also from firms in different industries. The return on Portfolio B is likely to be volatile than that of Portfolio A.

Answers

Answer 1

Answer:

Answer:

The correct answer is False.

Explanation:

A basic principle of investments is the creation of portfolios (or portfolios) for diversification purposes. At any given time, investors simultaneously hold a set of assets that make up their investment portfolio. A basic principle in finance is that an investor should not place all of his resources in a single asset or in a relatively small number of assets, but in a large number of investment instruments. In this way, the possible bad results in certain assets would be offset by the good results of others. Diversification allows the investor to lower the risk of his portfolio without sacrificing returns or, alternatively, increase the return on his portfolio without increasing his risk. Of course, diversification does not guarantee profits under any circumstances, but it does help to dampen the variability of returns on individual assets.

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3. If the average price of an airline ticket on a certain route rises from $200 to $250, the number of tickets sold drop from 800 to 600. Calculate the price elasticity of demand. Is the demand elastic or inelastic?

Answers

Answer:

-Price elasticity of demand=0.77

-The demand is inelastic because the elasticity is 0.77 and this number is less than 1.

Explanation:

The formula to calculate the price elasticity of demand is:

Price elasticity of demand=% change in the quantity demanded/% change in the price

To use this formula you have to calculate the % change in the quantity demanded and % change in the price:

% change in the quantity demanded=(Q2-Q1/((Q2+Q1)/2))*100

% change in the quantity demanded=(250-200/((250+200)/2))*100

% change in the quantity demanded=(50/(450/2))*100

% change in the quantity demanded=(50/225)*100

% change in the quantity demanded=22.22%

% change in the price=(P2-P1/((P2+P1)/2))*100

% change in the price=(600-800/((600+800)/2))*100

% change in the price=(-200/(1400/2))*100

% change in the price=(-200/700)*100

% change in the price=-28.57%

Now, you can replace the values in the formula to to calculate the price elasticity of demand:

Price elasticity of demand= 22.22%/-28.57%

Price elasticity of demand=0.77

The price elasticity of the demand is 0.77. An elastic demand is when the elasticity is greater than 1 and an inelastic demand is when the elasticity is less than one. So, according to this, the demand is inelastic because the elasticity is 0.77 and this number is less than 1.

"Audits may be characterized as (a) financial statement audits, (b) compliance audits, or (c) operational audits"

Answers

Answer:

Audit is an independent examination of records,financial statements or process in order to give report to the party that has commissioned the audit

Explanation:

Audit can be of the three types highlighted in the question.

Audit of financial statements involves an external auditor examining the financial statements of clients i.e the income statement,statement of financial position.the cash flow statement as well statement of changes in equity e.t.c with a view to expressing an opinion on whether the financial statements show a true and fair view of the performance of the organisation audited and sometimes whether they were prepared in line with generally accepted accounting standards such as US GAAP.

Compliance audit is simply to find out whether the person audited has conformed with certain laid down policies and procedures such as the policies to follow in granting credit facilities to bank customers.

Process audit is about examining a process to see if the steps taken by the person carrying the tasks are logical and to find out areas for improvement in order to cut down time and resources used.

Sheridan Company signed a three-month, zero-interest-bearing note on November 1, 2020 for the purchase of $497000 of inventory. The face value of the note was $509000. Sheridan used a "Discount of Note Payable" account to initially record the note. Assuming that the discount will be amortized equally over the 3-month period and that there was no adjusting entry made for November, the adjusting entry made at December 31, 2020 will include aa. debit to Discount on Note Payable.b. debit to Interest Expense .c. credit to Discount on Note Payable.d. credit to Interest Expense.

Answers

Answer:

Explanation:

The journal entry to record the note payable at discount

Cash A/c Dr $497,000

Discount on Note payable A/c Dr $12,000

To Note Payable A/c $509,000

(Being the note payable is recorded at discount)

Now we know that the discount is for 3 months but we have to calculated for 2 months only i.e from November 1 to December 31

So, the discount would be

= $12,000 × 2 months ÷ 3 months

= $8,000

And the journal entry is

Interest Expense A/c Dr $8,000

To Discount on Note payable A/c $8,000

(Being the interest expense is recorded)

Why is that 0.8 in fractional form is 8/10

Answers

Answer:

Decimal placement

Explanation:

It is 8/10 because, in the decimal 0.8 , the 8 is in the tenths place. If it was 0.08 the fraction would be 8/100 and so on and so forth.

In January, Knox Company requisitions raw materials for production as follows: Job 1 $936, Job 2 $1,690, Job 3 $767, and general factory use $667.Prepare a summary journal entry to record raw materials used:

DEBIT CREDIT
Work in Process Inventory
Jan 31. Manufacturing Overhead
Raw Materials Inventory

Answers

Answer:

Materials used in production go to Work in Process so;

= 936 + 1,690 + 767

= $3,393

The materials used in the general factory will go to Manufacturing Overhead.

Date Debit Credit

Jan 31 Work in Process $3,393

Manufacturing Overhead $ 667

Raw Materials Inventory $4,060

Suppose selected financial data of Target and Wal-Mart for 2017 are presented here (in millions). Target Corporation Wal-Mart Stores, Inc. Income Statement Data for Year Net sales $64,900 $405,000 Cost of goods sold 44,000 300,000 Selling and administrative expenses 14,000 75,000 Interest expense 650 1,800 Other income (expense) (70 ) (380 ) Income tax expense 1,300 6,500 Net income $ 4,880 $ 21,320 Balance Sheet Data (End of Year) Current assets $16,000 $45,000 Noncurrent assets 25,000 120,000 Total assets $41,000 $165,000 Current liabilities $10,000 $54,000 Long-term debt 16,800 43,000 Total stockholders’ equity 14,200 68,000 Total liabilities and stockholders’ equity $41,000 $165,000 Beginning-of-Year Balances Total assets $43,000 $162,000 Total stockholders’ equity 12,500 64,000 Current liabilities 10,000 54,000 Total liabilities 30,500 98,000 Other Data Average net accounts receivable $7,400 $3,800 Average inventory 6,800 32,800 Net cash provided by operating activities 5,500 25,500 Capital expenditures 1,600 11,500 Dividends 450 3,500 (a) For each company, compute the following ratios. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.)(a) For each company, compute the following ratios. (Round all answers to 2 decimal places, e.g. 1.83 or 1.83%.)Ratio TargetWal-Mart(1) Current ratio Enter a number:1 Enter a number:1(2) Accounts receivable turnover Enter a numbertimes Enter a numbertimes(3) Average collection period Enter a numberdays Enter a numberdays(4) Inventory turnover Enter a numbertimes Enter a numbertimes(5) Days in inventory Enter a numberdays Enter a numberdays(6) Profit margin Enter percentages% Enter percentages%(7) Asset turnover Enter a numbertimes Enter a numbertimes(8) Return on assets Enter percentages% Enter percentages%(9) Return on common stockholders’ equity Enter percentages% Enter percentages%(10) Debt to assets ratio Enter percentages% Enter percentages%(11) Times interest earned Enter a numbertimes Enter a numbertimes(12) Free cash flow