You have a portfolio which is composed by a risky asset with an expected rate of return of 15% and a standard deviation of 20% and a risk free asset with a rate of return of 10%. What portion of your portfolio should be invested in the risky asset if you want your portfolio to have a standard deviation of 8%?

Answers

Answer 1
Answer:

Answer:

Weight of risky asset = 0.4 or 40%

Explanation:

The standard deviation(SD) of a portfolio with one risky asset and one risk free asset can be calculated by multiplying the weightage of investment in the risky asset by the standard deviation of the risky asset as the risk free asset's standard deviation is zero. The formula to calculate the standard deviation of such a portfolio is,

Portfolio SD = weight of risky asset * Standard deviation of risky asset

Plugging in the values for portfolio SD and standard deviation of risky asset, we can calculate the weight of risky asset in the portfolio to be,

0.08 = weight of risky asset * 0.2

0.08 / 0.2 = weight of risky asset

Weight of risky asset = 0.4 or 40%


Related Questions

Question 5 of 23Alice isn't sure which labor rate to use in her project budget. Which employee labor rate would you tell herto use?Select an answer:burdened ratessalaries plus bonusbillable ratessalaries
Suppose that just by doubling the amount of output that it produces each year, a firm s per-unit production costs fall by 30 percent. This is an example of: a. technological advance. b. the demand factor. c. economies of scale. d. improved resource allocation.
Abbott Company uses the allowance method of accounting for uncollectible accounts. Abbott estimates that 3% of credit sales will be uncollectible. On January 1, Allowance for Doubtful Accounts had a credit balance of $3,700. During the year, Abbott wrote off accounts receivable totaling $2,500 and made credit sales of $115,000. There were no sales returns during the year. After the adjusting entry, the December 31 balance in Bad Debt Expense will be
Following is a list of financial statement items and amounts for Vantage Service as of 12/31/Year 1, the end of its first year in operation.Accounts Receivable $ 41,300Accounts Payable 31,300Cash 10,130Common Stock 21,300Notes Payable 10,260Equipment 50,650Sales Revenue 106,500Fuel Expense 10,130Rent Expense 11,200Advertising Expense 5,130Salaries and Wages Expense 21,300Retained Earnings ?Dividends 19,520Required: Prepare the Income Statement for the year ended December 31, Year 1. Prepare the statement of retained earnings for the year ended December 31, Year 1. Prepare the balance sheet for the year ended December 31, Year 1.
Which of the following management actions is permissible during a union certification election? Promising benefits to employees if they reject the union Requiring all employees to attend "captive audience" speeches in the company auditorium regarding the union organizing effort Requiring small groups of employees to meet with management in a supervisor’s conference room to discuss the organizing effort Asking employees in advance of the election how they feel about the union

Suppose the corrective tax policy and the number of pollution permits available do not change in spite of this demand shift. As a result of the technology change, the price of pollution will change under , and the quantity of pollution will change under

Answers

Answer:

As a result of the technology change, the price of pollution will be same as price of pollution with pollution permits.

The quantity of pollution with corrective tax will be lower than quantity of pollution with pollution permits.

Explanation:

The pollution permits are issued to reduce pollution by firms. The companies will reduce the pollution and will only be able to emit pollution up to certain limit. The price of pollution with corrective tax will be same as the price of pollution with pollution permits.

Final answer:

The change in technology will effect an increase in the price of pollution due to the increased cost of production factoring in the social cost of pollution, hence shifting the supply curve upward. The quantity of pollution will decrease as firms adopt cheaper technologies for pollution reduction influenced by the corrective tax policy and pollution permits.

Explanation:

The subject of your question is concerned with corrective tax policy and pollution permits in the context of a market economy under the influence of advances in technology. Under the original conditions before the social costs of pollution are taken into account, the equilibrium was met at a pollution price of $15 with a quantity of 440. However, once the external cost of pollution has been factored in, the supply curve shifts upward, creating a new equilibrium at a price of $30 and a quantity of 410, indicating an increase in the cost of pollution and a decrease in its quantity.

These policy instruments (corrective tax and pollution permits) induce companies to invest in technologies that reduce pollution higher costs of pollution as a result of the corrective tax motivate firms to seek cheaper technologies for pollution reduction. Those with less costly ways of lessening pollution will do so to reduce their tax expense, while those who would incur large costs in doing so would opt to pay the tax. The option of pollution permits introduces a marketplace where firms can purchase the right to pollute, the cost of which is again a motivator for firms to reduce pollution. Consequently, the demand for pollution permits among firms will influence their pricing. Firms that can reduce pollution at lower costs will do so the most. With no change in demand for pollution permits or corrective tax policies, the price of pollution will change as a result of the conditions set by these policies, and the quantity will change according to the adoption of more efficient technology.

Learn more about Economics of Pollution here:

brainly.com/question/32571033

#SPJ11

Wiley Consulting purchased $7,800 worth of supplies and paid cash immediately. Which of the following general journal entrie will Wiley Consulting make to record this transaction? Assume the company's policy is to Initially record prepaid and unearned Items In balance sheet accounts. Multiple Choice Accounts Accounts Payable 7,800
Supplies 7, 800

Answers

Answer: Debit Supplies and Credit Cash

Explanation: From the above question, Wiley paid cash for the supplies and in accounting you debit the receiver and credit the giver.

In the question above, the supplies account is receiving value while the cash is giving value. Then the right journal entry is to Debit supplies and credit cash.

Cemex, the largest cement producer in Mexico: a) is an insignificant competitor outside its home market. b) has only expanded into Spanish-speaking markets. c) generates about half of its income from outside Mexico. d) was eventually acquired by Holder Bank of Switzerland after Holder Bank entered the Mexican market.

Answers

Answer:

The correct answer is C. Cemex, the largest cement producer in Mexico, generates about half of its income from outside Mexico.

Explanation:

CEMEX is an international company for the construction industry, which offers products and services to clients and communities in more than 50 countries around the world. The Mexican company holds the third place in world sales of cement and is the main producer of ready-mix concrete, with a production capacity of approximately 77 million tons per year, serving the markets of America, Europe, Asia, Africa and the Middle East.  50% of the company's sales come from its operations in Mexico, 25% of its plants in the United States, 15% from Spain, and the rest from its plants in other parts of the world.

Giả sử Công ty TNHH Đông Đô mua 1 bản quyền công nghệsản xuất dứa quả xuất khẩu của Nhật Bản với giá là 500.000USD (tỷ
giá 16.000VNĐ/USD) tính ra bằng 800 triệu VNĐ, thanh toán theo
hình thức thư tín dụng (L/C) thông qua Ngân hàng Ngoại thương Việt
Nam, thuế nhập khẩu 10% và thuế GTGT hàng nhập khẩu 10%. Công
ty đã nộp các khoản thuế trên bằng chuyển khoản. Chi phí đăng ký
pháp lý liên quan đến bản quyền công nghệ trong nước là 16,5 triệu đã
trả bằng tiền mặt (thuế GTGT 10%). Biết rằng doanh nghiệp thực hiện
tính nộp thuế GTGT theo phương pháp khấu trừ.
Yêu cầu : Xác định nguyên giá TSCĐ vô hình vừa mới được mua
(Biết rằng TSCĐ vô hình được đưa vào sử dụng ngay)

Answers

Answer:fjdkndnfnf

Explanation:bfnfnndndnfnfnwd

Jean Michaud pays his two employees $900 and $1,200 per week. Assume a state unemployment tax rate of 5.7% and a federal unemployment tax rate of 0.6%. What state and federal unemployment taxes will Jean pay at the end of quarter 1 and quarter 2

Answers

Answer:

The quarter has 3 months so all 15 weeks shall have following taxes:

Employee Wages Exempt under FUTA or SUTA

Employee 1  

Wages = 15 week x 900 = 13.500  

Exempt under FUTA or SUTA = 13,500 - 7,000 = 6.500

Employee 2  

Wages = 15 week x 1200 = 18.000  

Exempt under FUTA or SUTA = 18.000 - 7,000= 11000

From the above table.

The JM pays employee 1: 900 and employee 2: 1,200. For 15 weeks they were paid,

Employee I is paid, 900 x 15 weeks

= 13,500

Employee 2 is paid, 1200 x 15 weeks

= I 8,000

For employee 1,

= 13,500 - 7,000

Here, SUTA tax is 5.4% on the first 7,000 the employer pays an employee = 6500

For employee 2,

=18,000 - 7000

Here, the SUTA tax is 5.4% on the first 7000 the employer pays an employee =11000

The taxable wages are obtained by deducting.

= (13,500 +18000) - (6,500 +11,000)  

= 31500 - 17500

= 14000

The SUTA and FUTA taxes that JM pays at the end of quarter 1 and 2 is, SUTA,

0.057 x 14,000 = $798

FUTA.

0.008 x 14000

= $112

Hence. The SUTA and FUTA taxes paid are $798 and $112 respectively.

Final answer:

Jean Michaud will pay a state unemployment tax of $1,556.10 and a federal unemployment tax of $163.80 per quarter for his two employees.

Explanation:

The question pertains to calculating the unemployment taxes that Jean Michaud will have to pay for his two employees at a state rate of 5.7% and federal rate of 0.6%. Firstly, we calculate the total wages paid to both employees per quarter. One quarter comprises 13 weeks, therefore the total wages paid per quarter would be ($900+$1200) * 13 = $27,300.

Next, we calculate the unemployment taxes. The state unemployment tax would be $27,300 * 5.7% = $1,556.10 and the federal unemployment tax would be $27,300 * 0.6% = $163.80.

Therefore, the state and federal unemployment taxes Jean will pay at the end of quarters 1 and 2 are respectively $1,556.10 and $163.80. Note, these calculations assume that these are the only two employees and their wages are constant throughout these quarters.

Learn more about Unemployment Taxes here:

brainly.com/question/29853561

#SPJ3

Although ultimate responsibility for implementing and executing strategy falls upon the shoulders of senior executives, a. the success or failure of the implementation/execution effort hinges chiefly on a company's reward system and whether its policies and procedures are strategy-supportive.
b. top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units.
c. the pivotal and most decisive strategy-implementing actions are carried out by frontline supervisors who have the day-to-day responsibility of seeing that key activities are done properly.
d. the success or failure of the implementation/execution effort hinges chiefly on doing an effective job of empowering employees to make day-to-day operating decisions that support good strategy execution.
e. it is a company's employees who most determine whether the drive for good strategy execution will succeed or fail.

Answers

Answer: top-level managers still have to rely on the active support and cooperation of middle and lower-level managers in pushing needed changes in functional areas and operating units

Explanation:

The senior executives in organizations are responsible for the implementation and execution of directives to achieve organizational goals. For them to achieve this, top-level managers have to rely on the cooperation and active support of the middle and lower-level managers for organizational success.

The top level managers are in charge of planning and directing the group of individuals as they monitor their work and implement needed changes.

Other Questions
The Lebanese steel factory “STEEL CO” was the leader in its market for many years. Today, the management noticed that sales are decreasing since the market prices are dropping down due to unbeatable offers and discounts from other companies operating in the market for more than 20 years ago.The management decided to use “Analytical Power” (software) to analyze the market by collecting data online via Internet from many websites and saving this data on large servers. As a result, “Steel Co.” decided to change its production line to manufacture steel products only to luxurious villas and residential homes, located in high level areas of Lebanon. This strategy helped the company to sell targeted customers at higher prices making higher revenues. The new system includes a Website allowing customers to select online the designs they wish, and even to customize the products based on quality, colors, styles, etc…Case Questions (6 points each)1)What is the force according to Porter’s competitive forces model, faced by the company? *CustomersSuppliersNew market entrantTraditional competitor2)What is the information system strategy (or strategies) used by the company to face the forces? *Focus on market nicheFocus on market niche & Low cost leadershipFocus on market niche & Customer intimacyProduct differentiation & Customer intimacy3)What are the main IT components mentioned in this case? * a) Software / Telecommunications / Physical facilitiesb) Hardware / Software. C) Software / Telecommunications / Hardwared) Telecommunications / Software4)If the company is not sure which IS strategy to use in order to face the competitive forces, which model may best help in this case? *Porter competitive forcesValue chainPorter strategiesEconomic impacts5)To which type of system the “Analytical Power” software belongs? *DSSESSMISTPS