Which security, A, B, or C, will provide the greatest return per unit of risk when combined
Question:
Which security, A, B, or C, will provide the greatest return per unit of risk when combined with the risk-free asset with a 5 percent rate of return?
ERA = 20 percent, σA= 5 percent
ERB= 25 percent, σB= 10 percent
ERC= 30 percent, σC= 15 percent
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 71% (14 reviews)
Determine which line consi...View the full answer
Answered By
Asim farooq
I have done MS finance and expertise in the field of Accounting, finance, cost accounting, security analysis and portfolio management and management, MS office is at my fingertips, I want my client to take advantage of my practical knowledge. I have been mentoring my client on a freelancer website from last two years, Currently I am working in Telecom company as a financial analyst and before that working as an accountant with Pepsi for one year. I also join a nonprofit organization as a finance assistant to my job duties are making payment to client after tax calculation, I have started my professional career from teaching I was teaching to a master's level student for two years in the evening.
My Expert Service
Financial accounting, Financial management, Cost accounting, Human resource management, Business communication and report writing. Financial accounting : • Journal entries • Financial statements including balance sheet, Profit & Loss account, Cash flow statement • Adjustment entries • Ratio analysis • Accounting concepts • Single entry accounting • Double entry accounting • Bills of exchange • Bank reconciliation statements Cost accounting : • Budgeting • Job order costing • Process costing • Cost of goods sold Financial management : • Capital budgeting • Net Present Value (NPV) • Internal Rate of Return (IRR) • Payback period • Discounted cash flows • Financial analysis • Capital assets pricing model • Simple interest, Compound interest & annuities
4.40+
65+ Reviews
86+ Question Solved
Related Book For
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary
Question Posted:
Students also viewed these Corporate Finance questions
-
Security A offers an expected return of 15 percent with a standard deviation of 7 percent. Security B offers an expected return of 9 percent with a standard deviation of 4 percent. The correlation...
-
The risk free rate is 7%, the return in the market is 10%, and the beta is 1.30. What return must you receive to be satisfied that you are being fairly compensated for the risk of the firm?
-
Asset W had an expected return of 16.5 percent and a beta of 1.25. if the risk-free rate is 6 percent, complete the following table for portfolios of Asset W and risk-free asset. Illustrate the...
-
No Opportunity Costs The Van Division of MotoCar Corporation has offered to purchase 180,000 wheels from the Wheel Division for $41 per wheel. At a normal volume of 500,000 wheels per year,...
-
Who pays for accounting regulation and who benefits?
-
Consider the project described in Problem 6. Assume that the firm plans to finance 40% of its net capital expenditure and working capital needs with debt. a. Estimate the cash flow to equity for each...
-
In problem 3-13, you were asked to prepare a statement of cash flows for New Zealand Dairy Company. Use the information given in the problem to compute the firms free cash flows and the financing...
-
1. DonorsChoose.org is structured like many contemporary business organizations. Do you think this structural similarity is useful for a charity, or should charities not try to emulate the...
-
(a) Explain the following terms as used in international finance: (i) Floating rate notes (FRNs). (1 mark) (ii) Forfaiting. (1 mark) (iii) Crowd funding. (1 mark) (iv) Green bond. (1 mark) (b) One of...
-
Alabama Atlantic is a lumber company that has three sources of wood and five markets to be supplied. The annual availability of wood at sources 1, 2, and 3 is 15, 20, and 15 million board feet,...
-
You are following five different stocks and need to issue a recommendation (buy, hold, or sell) to your customers. The market return is 7 percent, with a standard deviation of 4 percent. The...
-
The current price of a stock is $20. It is expected to rise to $22 in one year and pay an annual dividend of $0.50 during the year. The RF is 5 percent; the ERM is 9 percent, and the stocks beta is...
-
According to the Framework there is a potential 'conflict between the characteristics of relevance and reliability. There can also be tension between two aspects of reliability - neutrality and...
-
Describe the adjustment to long-run equilibrium if an economys short-run equilibrium output is above potential output.
-
How does the condition for short-run equilibrium differ from that for long-run equilibrium?
-
Describe the five time lags involved in implementing stabilization policy.
-
How does direct finance differ from indirect finance? Which form of finance is more important?
-
Why does debt deflation make financial crises worse?
-
Your company has just received an order from a good customer for a specially designed electric motor. The contract states that, starting on the 13th day from now, your firm will experience a penalty...
-
A stock has had returns of 8 percent, 26 percent, 14 percent, 17 percent, 31 percent, and 1 percent over the last six years. What are the arithmetic and geometric average returns for the stock?
-
A rod of length \(\ell\) rotates about one end at a constant rotational speed \(\omega\). The rod is in a uniform magnetic field \(\vec{B}\), and the axis of rotation is parallel to \(\vec{B}\)...
-
Answer parts ac for each of the following cases. Answer parts ac for each of the following cases. a. Calculate the future value at the end of the specified deposit period. b. Determine the effective...
-
Mary Sullivan, capital outlay manager for Waxy Widgets, has been instructed to establish a contingency fund to cover the expenses over the next two years (24 months) associated with repairing...
-
You are given the series of cash flows shown in the following table. a. Calculate the compound annual growth rate associated with each cash flow stream. b. If year-1 values represent initial deposits...
-
On-campus corporate presentations: Sympathy for the Devil Many students complain about the high number of corporate presentations taking place both on- and off-campus. In this question, we seek to...
-
How do organizations cultivate a culture of open innovation, leveraging crowdsourcing platforms, collaborative networks, and cross-industry partnerships to harness external knowledge and drive...
-
Braeden Sim is the accountant for Sim's Internet Service. From the following information, his task is to construct a balance sheet as of April 30, 201X, in proper form. Could you help him? (Click the...
Study smarter with the SolutionInn App