Answer: Step 1) Find share of market in the Portfolio
(11.5-3.5)x+3.5=6.5
8x=3
x=3/8
x=0.375
=37.5%
SD of market portfolio= 0.375x+0=9.5
x=9.5/0.375
=25.33%
correl = cov / (std 1 * std2)
0.4=COV/0.2533*0.545
COV= 0.2533*0.545*0.4=0.05
cov of 2 assets = b1 * b2 * variance of market
0.05=B1*1*0.2533^2
B of security=0.0032
Capm Model
3.5+0.0032(11.5-3.5)=3.5256% expected return
Explanation:
Step 1) Find the share of market in the portfolio in order to find market SD
Step 2) Find Covariance betweens security and market by using both SDS and correlation
Step 3) Find Beta of Security using Co variance
Step 4) Use the Beta in CAPM model in order to find expected return
Answer:
Option (D) is correct.
Explanation:
Given that,
Dividend, D0 = $0.90
Price, P0 = $27.50
Growth rate, g = 7.00% (constant)
D1 = D0 (1 + g)
= $0.90 × (1 + 0.07)
= $0.90 × 1.07
= $0.963
Cost of equity, Ke = [ D1 ÷ P0 ] + g
= [$0.963 ÷ $27.50 ] + 0.07
= 0.0350 + 0.07
= 0.1050 i.e 10.50 %
Answer: Option (a) is correct.
Explanation:
Cheizza, a pizza vendor knows that the fresh cheese is the unique selling point for him. And because of this fresh cheese, the demand for his pizza is drastically increases. So, for meeting this demand, he have to purchase more cheese.
We know that cheese is made up from milk and milk is used as an input for the production of cheese. But milk is a raw material and limited in quantity to meet this demand.
Cheizza also knows that cheese is used in the pizzas, hence, if there is any changes in the supply of cheese, as a result it directly affects the demand for pizzas.
Therefore, there is a scarcity of resources in the form of milk.
Answer:
Volume objectives
Explanation:
Volume objectives are the bases pricing decisions on market share, the percentage of a market controlled by a certain company or product.
Volume Objectives refer to the objectives based on the part of a market controlled by a certain product. This helps to calculate the minimum sales of a product at a certain price level to cover all the production costs.
In the given question, the team should use volume objectives for its action plan.
