Sheridan Company maintains a petty cash fund for small expenditures. These transactions occurred during the month of August. Aug. 1Established the petty cash fund by writing a check payable to the petty cash custodian for $225. 15Replenished the petty cash fund by writing a check for $220.30. On this date, the fund consisted of $4.70 in cash and these petty cash receipts: freight-out $96.00, entertainment expense $48.70, postage expense $41.70, and miscellaneous expense $32.50. 16Increased the amount of the petty cash fund to $325 by writing a check for $100.00. 31Replenished the petty cash fund by writing a check for $309.30. On this date, the fund consisted of $15.70 in cash and these petty cash receipts: postage expense $139.80, entertainment expense $96.40, and freight-out $71.80. (a) Journalize the petty cash transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 2 decimal places, e.g. 52.75.)

Answer: The new stock price of DL Inc. would be $37.50 if the covariance of its rate of return with the market portfolio halves on a permanent basis but everything else remains the same.

If the covariance of the security's rate of return with the market portfolio halves on a permanent basis but everything else remains the same, the security's new beta would be half its initial beta. The beta of a security is the covariance of the security's rate of return with the market portfolio divided by the variance of the market portfolio.The CAPM formula is used to compute the expected rate of return on a security, and it is as follows: Required return = risk-free rate of return + (beta x market risk premium).

The current price of DL Inc. stock can be calculated using the CAPM formula as follows: Beta = covariance of DL Inc. with the market portfolio/variance of the market portfolio= ?/ (8 x 8) = ?/64 where beta is unknown.Covariance of DL Inc. with the market portfolio = 0.5, Covariance of DL Inc. with the market portfolio = 0.5 x Var (DL Inc.)/Var (Market) = 0.5 Covariance of DL Inc. with the market portfolio is half the original covariance.

The beta for the security = 0.5 Covariance of DL Inc. with the market portfolio = 0.5 x ?Var (DL Inc.)/Var (Market) = 0.5 (0.5 x ?Var (DL Inc.)/Var (Market)) = ?Var (DL Inc.)/ (2 x Var (Market))Required rate of return = 4% + (0.5 x 8%) = 8%.DL Inc.'s current stock price = Dividend per share/ (required rate of return - growth rate) = $3/ (8% - 0%) = $37.50.

Therefore, the new stock price of DL Inc. would be $37.50 if the covariance of its rate of return with the market portfolio halves on a permanent basis but everything else remains the same.

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Answer:

The answer is option "D"

Explanation:

The suitability condition that broker-dealer firms have to adopt includes making investment recommendations on the basis of their applicability in terms of what the customer's profile is. To do this, the firm needs to have adequate and reasonable understanding of the customer, their needs, their risk profile, details of their other investments and their age among several other factors. Firms use these details and then perform their own research, or 'due diligence' to ensure that the recommendations made are appropriate in the customer's context. Options A and B pertain to this criteria and are therefore correct. Option C is also correct since, even if the investment recommendation is in line with the customer's profile, firms must still refrain from making trade recommendations that are excessive in size because they can, among other issues, raise the risk profile of the trade.

Now lets look at option D. Broker-dealers do rely on the customers providing customer specific information so that they can plan investment recommendations accordingly, however, this is not the only practice that is required. Firms need to conduct their own research and due diligence as well. Furthermore, customers may be unwilling to disclose certain information, for example, details of their other investments. In this case, firms need to be cautious and carefully analyse whether they have 'enough' customer specific information to be reasonably certain that the investment recommendation is appropriate. As long as enough information exists to form the reasonable basis, firms do not need to refrain from making recommendations.

Therefore, the correct option is D.

I just finished this quiz and the answer is, "USPTO"