Famous Chamois is an automated car wash that advertises that your car will be in and out within 15 minutes. Service takes exactly 6 minutes for each car, but the interarrival times for customers (cars) is exponentially distributed with a mean of 7 minutes. Simulate this process for 8 hours of each working day for 100 days. Will Famous Chamois be able to keep its promise to the average customer? Upload the completed Simquick file with your answer to the above question on an additional worksheet in the same file.
Answers
Yes, Famous Chamois will be able to keep its promise to the average customer.
The stimulating process is shown below:
mean inter arrival Time = 11 = 7mins
So, mean Arrival Rate per unit time, = 1/7 Per min
= 0.143 Per min.
The distribution notation is XN EXP(). Therefore, XN EXP (0.143).
The Probability density function is
f(x) = e⁻ˣ where, the number.
e=2.71828 182846,
The Curve is
f(x) = 0.1436e⁻⁰°¹⁴³ˣ, "where x is at least.
Zero and =0.143.
for Example, f(6)=0.143e⁻⁽⁰°¹⁴³⁾⁽⁶⁾=0.061
The car wash spends six minutes Ca.
The graph is shown below in the image attached:
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Related Questions
Which of the following groups is among the internal stakeholders of Sara Lee? A) Suppliers B) Strategic alliances C) Customers D) Bankers OE) Employees 5
Answers
Among the given options, the group that is among the internal stakeholders of Sara Lee is Employees.
Internal stakeholders are individuals or groups that are affected by the operations of a business, including owners, employees, and managers.
They play a significant role in the functioning of the company because they are directly involved in the daily operations of the company.
Internal stakeholders are those people or groups within a company that are involved in the day-to-day operations of a business.
They are an integral part of the business and are essential to the success of the company.
Employees are a critical internal stakeholder group.
They are responsible for the company's day-to-day operations, and their work is essential to the company's success.
Sara Lee is an American consumer goods company.
Employees are one of the primary internal stakeholders of Sara Lee. The company's success depends on the efforts of its employees.
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The market and Stock J have the following probability distributions: Probability ™M 0.3 14.00 % 21.00 % 0.4 8.00 3.00 0.3 19.00 10.00 The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. Calculate the expected rate of return for the market. Do not round intermediate calculations. Round your answer to two decimal places. % Calculate the expected rate of return for Stock J. Do not round intermediate calculations. Round your answer to two decimal places. % b. Calculate the standard deviation for the market. Do not round intermediate calculations. Round your answer to two decimal places. Calculate the standard deviation for Stock J. Do not round intermediate calculations. Round your answer to two decimal places. %
Answers
According to the question we can calculate the expected rate of return and standard deviation:
a. Expected rate of return:
To calculate the expected rate of return, you need to multiply each possible return by its corresponding probability and sum them up.
For the market:
Expected rate of return = (Probability1 * Return1) + (Probability2 * Return2) + (Probability3 * Return3)
For Stock J:
Expected rate of return = (Probability1 * Return1) + (Probability2 * Return2) + (Probability3 * Return3)
b. Standard deviation:
To calculate the standard deviation, you need to calculate the variance first. The variance is the average of the squared differences between each return and the expected rate of return.
For the market:
Variance = (Probability1 * (Return1 - Expected Return)^2) + (Probability2 * (Return2 - Expected Return)^2) + (Probability3 * (Return3 - Expected Return)^2)
Standard deviation = square root of the variance
For Stock J:
Variance = (Probability1 * (Return1 - Expected Return)^2) + (Probability2 * (Return2 - Expected Return)^2) + (Probability3 * (Return3 - Expected Return)^2)
Standard deviation = square root of the variance
Please provide the values for Return1, Return2, and Return3 in the probability distributions, and I can assist you in calculating the expected rate of return and standard deviation for the market and Stock J.
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The figures below show the sales of hairdryers in one shop over the last 3 months.
Month 1: 140
Month 2: 197
Month 3: 150
Calculate the forecast for month 4 using exponential smoothing assuming that the forecast for the first month is 120 and the smoothing constant alpha = 0.8. Write the answer to 2 decimal places.
Answers
The sales of hairdryer forecast for Month 4 is 151.26
Using exponential smoothing, we need to use the formula:
Forecast for month 4 = (Previous forecast + Alpha * (Actual Sales - Previous forecast))
Given:
Previous forecast (Month 1) = 120
Smoothing constant (Alpha) = 0.8
Actual sales for Month 2 = 197
Calculating the forecast for Month 2:
Forecast for Month 2 = (120 + 0.8 * (197 - 120))
= (120 + 0.8 * 77)
= (120 + 61.6)
= 181.6
Now, using the same formula to calculate the forecast for Month 3:
Forecast for Month 3 = (181.6 + 0.8 * (150 - 181.6))
= (181.6 + 0.8 * -31.6)
= (181.6 - 25.28)
= 156.32
Finally, using the same formula to calculate the forecast for Month 4:
Forecast for Month 4 = (156.32 + 0.8 * (Actual sales for Month 3 - 156.32))
= (156.32 + 0.8 * (Actual sales for Month 3 - 156.32))
= (156.32 + 0.8 * (150 - 156.32))
= (156.32 + 0.8 * -6.32)
= (156.32 - 5.056)
= 151.264
Therefore, the forecast for Month 4 is 151.26 (rounded to 2 decimal places).
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ABC and XYZ have been operating an accounting firm as partners for a number of years and at the beginning of 2021, their capital balances were P85,000 and P70,000, respectively. During 2021, ABC invested an additional P10,000 on April 1 and withdrew P5,000 on August 30. XYZ withdrew P12,000 on May 1 and invested P12,000 on November 1. In addition, ABC and XYZ withdrew their salary allowances of P18,000 and P24,000, respectively. At year-end 2021 total capital of the ABC and XYZ partnership was P182,000. ABC and XYZ share income after salary allowances in a 60:40 ratio.
The ending capital of ABC is?
Answers
The ending capital of ABC can be calculated using the method in the following paragraph. The ending capital of ABC is P73,000.
The ending capital of ABC can be calculated by using the formula given below:
Beginning capital balance + Additional Investment - Withdrawals + Share in profit - Share in loss
Solution:Given,The beginning capital balance of ABC = P85,000
ABC invested an additional P10,000 on April 1, ABC withdrew P5,000 on August 30, ABC withdrew a salary allowance of P18,000, ABC's share in income after salary allowances in a 60:40 ratio
Hence, the share of ABC in income after salary allowances= 60% of (Total income after salary allowances)= 60% of (P18,000+ P24,000)= 60% of P42,000= P25,200
The share of XYZ in income after salary allowances= 40% of (Total income after salary allowances)= 40% of (P18,000+ P24,000)= 40% of P42,000= P16,800
Calculation of ending capital of ABC:
ABC's beginning capital balance = P85,000, ABC's additional investment on April 1= P10,000, ABC's withdrawal on August 30 = - P5,000, ABC's salary allowance = - P18,000, ABC's share in profit = + P25,200
Total capital of the ABC and XYZ partnership at year-end 2021 = P182,000
Let the ending capital of ABC be x. The ending capital of XYZ can be calculated by using the formula given below:
Ending capital balance of XYZ = Beginning capital balance + Additional Investment - Withdrawals + Share in profit - Share in loss
The beginning capital balance of XYZ = P70,000
XYZ withdrew P12,000 on May 1XYZ invested P12,000 on November 1XYZ withdrew a salary allowance of P24,000XYZ's share in income after salary allowances in a 60:40 ratio
Hence, the share of XYZ in income after salary allowances= 40% of (Total income after salary allowances)= 40% of (P18,000+ P24,000)= 40% of P42,000= P16,800
XYZ's ending capital balance = 70000 - 12000 + 12000 - 24000 + 16800 = P52,800
Now, Total capital of the ABC and XYZ partnership at year-end 2021 = P182,000
Therefore, P85,000 + P10,000 - P5,000 - P18,000 + P25,200 + X + P52,800 = P182,000P109,000 + X = P182,000X = P182,000 - P109,000X = P73,000
Therefore, the ending capital of ABC is P73,000.
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A movement along the aggregate demand curve but not a shift in the aggregate demand curve is created by a an increase in government purchases. b a fall in the price level. c a change in the quantity of money. d an increase in nominal GDP.
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A movement along the aggregate demand curve, but not a shift, is created by a fall in the price level (b). The other options - an increase in government purchases (a), a change in the quantity of money (c), and an increase in nominal GDP (d) - would cause shifts in the aggregate demand curve.
A movement along the aggregate demand curve occurs when there is a change in the price level, while other factors remain constant. When the price level falls, it leads to a decrease in the aggregate demand, as consumers can now purchase more goods and services with their given income. This movement along the curve is depicted by a change in the quantity of goods and services demanded at different price levels. On the other hand, an increase in government purchases (a), a change in the quantity of money (c), or an increase in nominal GDP (d) would shift the entire aggregate demand curve, representing changes in total spending or the overall level of economic activity.
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Read the questions below and list the answers below
1. Write 3 important criteria for the Medicare System
2. Write 3 important criteria for the Medicaaid System
3. List the coverage limits of the 4 important parts for the Medicare System:
MEDICARE TYPE (A)
MEDICARE TYPE (B)
MEDICARE TYPE (C)
MEDICARE TYPE (D)
Answers
Three important criteria for the Medicare System are eligibility, coverage of essential medical services, and cost-sharing provisions.
Three important criteria for the Medicaid System are income and asset eligibility requirements, coverage of essential health services, and federal-state partnership in funding.
1. Medicare System:
Eligibility: Medicare is primarily available for individuals aged 65 and older, as well as certain individuals with disabilities or specific medical conditions.Coverage of essential medical services: Medicare provides coverage for a range of essential medical services, including inpatient hospital care, outpatient services, physician visits, preventive services, and prescription drugs (covered under Part D).Cost-sharing provisions: Medicare beneficiaries are subject to cost-sharing requirements, such as deductibles, copayments, and coinsurance, to share the costs of their healthcare services.2. Medicaid System:
Income and asset eligibility requirements: Medicaid eligibility is based on income and asset limits, varying by state. Individuals with low income, including children, pregnant women, elderly adults, and people with disabilities, may qualify for Medicaid.Coverage of essential health services: Medicaid offers coverage for essential health services, including hospital care, doctor visits, preventive care, prescription drugs, laboratory tests, and mental health services.Federal-state partnership in funding: Medicaid is jointly funded by the federal government and individual states, with federal guidelines and regulations determining the program's coverage requirements, while states have some flexibility in designing their specific Medicaid programs.Coverage limits of the four important parts of the Medicare System:
Medicare Type A: Covers inpatient hospital care, skilled nursing facility care, hospice care, and some home health services. It generally does not require a monthly premium for most beneficiaries.Medicare Type B: Covers outpatient medical services, including doctor visits, preventive care, and medically necessary supplies. It requires a monthly premium, deductible, and coinsurance.Medicare Type C (Medicare Advantage): Provides an alternative to traditional Medicare, offering additional benefits and services through private insurance plans. Coverage and costs vary depending on the specific plan chosen.Medicare Type D: Covers prescription drugs. Beneficiaries can choose from various private drug plans, each with its own list of covered medications (formulary) and associated costs.Learn more about Medicare System here: https://brainly.com/question/31458871
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Which of the following is not a benefit gained from self-disclosure?
a. Increased accuracy in communication.
b. Increased likeability.
c. Increased self-awareness.
d. Reduction of stress
Answers
Increased accuracy in communication is not a benefit gained from self-disclosure. The correct answer is a.
Self-disclosure refers to the act of revealing personal information, thoughts, or feelings to others. It is a form of communication that can occur in various relationships and social interactions. While self-disclosure can have several benefits, increased accuracy in communication is not one of them.
The benefits of self-disclosure include:
b. Increased likeability: When individuals engage in self-disclosure, it allows others to get to know them on a deeper level. This can foster a sense of trust, intimacy, and connection, which in turn can increase likeability and strengthen relationships.
c. Increased self-awareness: Self-disclosure often involves reflecting on one's own experiences, thoughts, and emotions. By sharing personal information with others, individuals gain a better understanding of themselves and their own feelings, leading to increased self-awareness and personal growth.
d. Reduction of stress: Self-disclosure can serve as a form of emotional release. Sharing one's burdens, concerns, or struggles with others can provide a sense of relief and support, reducing stress and promoting emotional well-being.
While self-disclosure can enhance communication by fostering understanding, empathy, and intimacy in relationships, it does not necessarily increase the accuracy of communication. Accuracy in communication is primarily achieved through clear and effective expression of thoughts and ideas, active listening, and mutual understanding between communicators.
It's worth noting that self-disclosure is a complex process, and its benefits may vary depending on the context, the nature of the relationship, and individual preferences. Different individuals may have different comfort levels and boundaries when it comes to self-disclosure, and it is important to respect and consider these factors in interpersonal communication.
Therefore the correct answer is option a.
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A company like Alibaba brings together a series of producers, suppliers, and customers. However, they do not determine the nature of the products that are to be sold on the platforms they offer. As a firm they operate as ? A Network ecosystem as A Network orchestrator A Pipeline Ecosystem A Linear value stream as Both a Network ecosystem and Network orchestrator as Both a Linear value stream and a Network orchestrator as Both a Pipeline ecosystem and a Linear value stream Question 5 1 pts A firm's ability to continually introduce radical new enhancements to their currently, executing business models is called? Base Agility Entrepreneurial Agility Adaptive Agility Strategic Intent
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The company Alibaba brings together a series of producers, suppliers, and customers. However, they do not determine the nature of the products that are to be sold on the platforms they offer.
As a firm, they operate as a Network ecosystem and as a Network orchestrator.An explanation of Alibaba's business modelAlibaba is an example of a network ecosystem business model. It acts as an intermediary between producers and customers by connecting them through its platform. Suppliers can post their products and services on Alibaba's platform, which customers can then buy directly from them.This business model has numerous advantages.
The network model increases the likelihood of matching a supplier with the right customer by creating a more efficient market. It also allows for the exchange of valuable data between parties and fosters the development of new products and services.However, Alibaba also operates as a Network orchestrator, which provides a platform for the exchange of goods and services and establishes a network of producers, suppliers, and customers. It also offers logistical, payment, and marketing support, making it easier for producers to reach customers.The firm's ability to continually introduce radical new enhancements to their currently executing business models is called adaptive agility. Adaptive agility is the ability to be adaptable and quickly respond to unexpected or changing conditions in the business environment, such as market changes, technological advancements, and customer needs.
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(1) Compute the predetermined overhead application rate per hour for total overhead, variable overhead, and fixed overhead. Predetermined OH Rate Variable overhead costs Fixed overhead costs Total overhead costs (2) Compute the total variable and total fixed overhead variances and classify each as favorable or unfavorable. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Rate per hour" answers to 2 decimal places.) --------At 65% of Operating Capacity- Standard DL Overhead Costs Actual Results Variance Fav./Unf. Hours Applied Variable overhead costs Fixed overhead costs Total overhead costs
Answers
To compute the predetermined overhead application rate per hour for total overhead, variable overhead, and fixed overhead, we need to compute the rates using the formula;
Predetermined Overhead Application Rate = Estimated Overhead Costs/ Estimated Activity Level.1. Total Overhead costs Predetermined OH Rate = $800,000/ 50,000 hours= $16 per hour2. Variable overhead costs Predetermined OH Rate = $400,000/ 50,000 hours= $8 per hour3.
Total variable overhead variance = $420,000 - ($8 × 51,000) = $420,000 - $408,000 = $12,000 unfavorable.2. Total fixed overhead variance. Total fixed overhead variance = $260,000 - ($8 × 51,000) = $260,000 - $408,000 = $148,000 favorable. Thus, the total variable overhead variance is $12,000 unfavorable while the total fixed overhead variance is $148,000 favorable.
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One of your group members suggested to manipulate the figures you have calculated under activity-based costing.
Explain how this is unethical while referencing to the APES code of ethics (110). how does this unethical practice fall into the five fundamental principles of APES110 (integrity, objectivity, professional competence and due care, confidentiality and professional behaviour )
Answers
Manipulating the figures is an unethical practice and should not be entertained in any circumstance.
Activity-Based Costing is the process of calculating the cost of a product or service based on its activities. The suggestion to manipulate the figures in the calculated costing is an unethical practice, which is not accepted by the Australian Professional Ethical Standards (APES). It is not compliant with the five fundamental principles of APES 110 (integrity, objectivity, professional competence and due care, confidentiality, and professional behavior).1. Integrity: Integrity requires the members to be straightforward and honest in their professional activities. It is a violation of the integrity principle if an individual is manipulating the figures.2. Objectivity: Objectivity principle requires the members to provide a professional service without bias and prejudice. The manipulation of figures leads to biased results, and hence it is not objective.3. Professional competence and due care: It requires the members to have professional skills, knowledge, and experience to offer professional services. The manipulation of figures requires the members to lack professional competence and due care.
4. Confidentiality: Members have a duty to maintain confidentiality of their clients. Manipulating the figures of clients in the activity-based costing process is a breach of the confidentiality principle.5. Professional behavior: It requires members to act with appropriate demeanor and attitude. Manipulating the figures is inappropriate behavior. It is a violation of the professional behavior principle.How is it unethical to manipulate the figures? Manipulating the figures is an unethical practice because it misleads the stakeholders who rely on such information to make informed decisions. Misrepresenting the facts is a breach of trust and a violation of the ethical principles.The APES 110 Code of Ethics sets the ethical standards that members should adhere to in their professional activities. They should maintain integrity, objectivity, professional competence and due care, confidentiality, and professional behavior. Violating these principles leads to unethical practices that harm the reputation of members and their organizations.
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Horizon Inc. is analyzing the desirability of a capital expenditure that will allow them to produce and sell a new product. They have a required return of 11.5%, and have estimated the project will have an initial investment and incremental after-tax annual cash flows as shown below:
Year Cash Flow
0 - $365,000
1 60,000
2 95,000
3 182,000
4 250,000
What is the Net Present Value (NPV) for this project?
[Enter your solution rounded to the nearest whole number.]
Answers
If they have a required return of 11.5% and have estimated the project will have an initial investment then the Net Present Value (NPV) for this project is approximately $58,978.
To calculate the Net Present Value (NPV) for the project, we need to discount each cash flow to its present value and then sum them up. The discount rate used is the required return of 11.5%.
Year 0 cash flow: -$365,000 (initial investment)
Year 1 cash flow: $60,000
Year 2 cash flow: $95,000
Year 3 cash flow: $182,000
Year 4 cash flow: $250,000
Calculating the present value of each cash flow:
PV0 = -$365,000 / (1 + 0.115)^0 = -$365,000
PV1 = $60,000 / (1 + 0.115)^1 = $53,672
PV2 = $95,000 / (1 + 0.115)^2 = $75,239
PV3 = $182,000 / (1 + 0.115)^3 = $134,064
PV4 = $250,000 / (1 + 0.115)^4 = $161,003
Now, sum up the present values:
NPV = PV0 + PV1 + PV2 + PV3 + PV4
= -$365,000 + $53,672 + $75,239 + $134,064 + $161,003
= $58,978
Therefore, the Net Present Value (NPV) for this project is approximately $58,978.
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Jamie's credit card billing period ends on the 10th of every month. The grace period is 20 days. During what period of time will he receive free credit for a purchase made on July 23? A. 18 days B. 38 days C. 30 days D. 28 days
Answers
To determine the period of time during which Jamie will receive free credit for a purchase made on July 23, we need to consider the billing period and the grace period.
Jamie's credit card billing period ends on the 10th of every month, and the grace period is 20 days.
If Jamie made a purchase on July 23, the billing period for that purchase would be from July 23 to August 10.
Since the grace period is 20 days, Jamie would receive free credit for the purchase from August 11 to August 31.
Therefore, the period of time during which Jamie will receive free credit for the purchase made on July 23 is 20 days.
The correct answer is (A) 18 days
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Module 9. Planning, Budgeting and Cash Flows 1. What is the relationship between the balance sheet, the income/profit and loss account, and the cash flow statement? Specifically: - In terms of time - In terms of money Examples. 2. Why cash flow is important? Examples. 3. What is the mindset when calculating the costs and the revenues, given the high uncertainty of many variables to be included? 4. What is the purpose of budgeting? 5. Which are the main points investors might focus on your budget? Justify 6. How is budgeting organically related to other parts of the business plan? 7. Different business models have different structure in the budget. Present examples and discuss the main challenges in each of them. 8. What is the break-even analysis? How do you calculate it and why is important? 9. Does budgeting in new ventures differ from budgeting in existing businesses? How? Examples. 10. How does the time value of money affect budgeting and cash flows?
Answers
Time value of money discounts the future cash flow back to the present date, using the average rate of return and the number of periods.
The net balance of money coming into and going out of a business at a particular period is referred to as cash flow. A firm constantly receives and expends cash. For instance, when a retailer buys merchandise, money leaves the company and goes to its suppliers.
A cash flow is a physical or digital movement of funds; in its strictest definition, it refers to a payment, particularly one made from one central bank account to another.
Net income plus depreciation and amortization changed working capital, and capital expenditure is all included in free cash flow. Operating Cash Flow is calculated by adding operating income to depreciation, taxes, and any changes to working capital.
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Describe the strategies to mitigate such risks
1.Customer demand changes
2.Unexpected transit delays
3. Problem at suppliers, which delay critically needed
components
4. Theft, a much larger problem t
Answers
Implement strategies such as diversifying transportation options, maintaining alternative suppliers, using real-time tracking technologies, and implementing security measures to mitigate risks including customer demand changes, transit delays, supplier problems, and theft.
1. Customer demand changes:
- Conduct market research and customer surveys to anticipate potential shifts in customer preferences and demands.
- Maintain a flexible and agile supply chain to respond quickly to changes in demand.
- Have advanced planning and scheduling system
2. Unexpected transit delays:
- Diversify transportation options by working with multiple carriers and modes of transportation (e.g., road, rail, air, sea) to reduce dependency on a single provider.
- Use real-time tracking and monitoring technologies to gain visibility into the location and status of shipments, allowing proactive identification of potential delays.
3. Problem at suppliers, which delays critically needed components:
- Develop a robust supplier management process, including regular performance evaluations, risk assessments, and continuous communication with suppliers.
- Identify and qualify alternative suppliers for critical components to have backup options.
- Implement supply chain visibility tools to monitor and track supplier performance, production capacity, and potential bottlenecks.
4. Theft, a much larger problem:
- Conduct risk assessments of vulnerable areas, including warehouses, distribution centers, and transportation routes, and implement appropriate security measures, such as surveillance systems, alarms, and access controls.
- Utilize GPS tracking and security seals on shipments to monitor and secure the movement of goods.
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fica tax is a payroll tax that is paid only by employers. t/f
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The given statement "fica tax is a payroll tax that is paid only by employers" is False because FICA taxes are a combination of Social Security and Medicare taxes.
They are generally collected from employee paychecks by employers. FICA tax is a federal payroll tax that is deducted from your earnings paycheck by your employer. Both employers and employees contribute to FICA taxes. The employee's share of FICA tax is withheld from their earnings and paid to the Internal Revenue Service (IRS) on their behalf by their employer.
On the other hand, the employer matches this contribution by contributing a matching amount. Therefore, it is clear that FICA taxes are paid by both employers and employees. Thus, the given statement "fica tax is a payroll tax that is paid only by employers" is False.
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Suppose a call option on a given stock has premium $5 per share, and the put option at the same exercise price (E=$100) has premium $3 per share. The price of a Treasury security having the same maturity as the options is .9900 (dollars per face). a. What would you expect the price of the underlying security to be? b. Illustrate with a graph trhe profit or payoff profile that would result from a "covered call" (write call on the security you own) on this stock. Explain.
Answers
a) Based on the given information, the price of the underlying security can be expected to be around $97 per share.
b) A covered call strategy involves writing a call option on a security that you already own. The graph of the profit or payoff profile for a covered call strategy would show a limited upside potential and a potential downside protection. The profit from the covered call strategy is limited to the premium received from writing the call option, and if the stock price remains below the exercise price, the investor retains ownership of the stock with downside protection.
a) To determine the expected price of the underlying security, we can consider the relationship between the call and put options. The difference between the call and put premium is $5 - $3 = $2 per share. This difference is also known as the put-call parity. According to put-call parity, the difference in premiums is equal to the difference between the stock price and the present value of the exercise price. Therefore, we can expect the price of the underlying security to be approximately $97 ($100 - $2).
b) The graph of the profit or payoff profile for a covered call strategy would show a relatively flat line or a slight upward slope up to the exercise price of $100. Beyond the exercise price, the profit would be limited as the investor would have to sell the stock at the exercise price. The strategy provides potential income from the call option premium but limits the upside potential if the stock price rises significantly. The covered call strategy is often used by investors who are willing to sell their shares at a specific price (the exercise price) in exchange for receiving income from writing the call option. It provides a balance between potential income and downside protection for the investor.
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"Monetary Policy and the Federal Reserve"
From June 1999 until May 2000, the Fed tightened Monetary Policy:
a. How might the Fed have done that? (20 marks)
Explain into 5-6 paragraph around 1000 words.
Answers
From June 1999 until May 2000, the Fed tightened monetary policy by increasing interest rates. This was done to slow down the economy and prevent inflation.
The Federal Reserve raised its federal funds rate six times over the course of this period, going from 4.75% in June 1999 to 6.5% in May 2000.
One way the Fed tightened monetary policy was through its open market operations. By selling Treasury securities, the Fed reduced the amount of reserves banks had, which in turn made it more expensive for banks to lend money to consumers and businesses. This decrease in lending helped to slow down economic growth and reduce inflationary pressures.
Another way the Fed tightened monetary policy was by adjusting the discount rate, which is the rate at which banks can borrow money from the Fed.
By raising the discount rate, the Fed made it more expensive for banks to borrow, which in turn reduced the amount of money banks had available to lend to consumers and businesses. This decrease in lending also helped to slow down economic growth and reduce inflationary pressures.
In addition to these methods, the Fed also communicated its intention to tighten monetary policy through its statements and speeches. This forward guidance helped to shape expectations among consumers and businesses, which in turn influenced their spending and investment decisions.
By signaling its intention to raise interest rates, the Fed was able to slow down economic growth and prevent inflation from spiraling out of control.
Overall, the Fed tightened monetary policy from June 1999 to May 2000 by using a combination of open market operations, discount rate adjustments, and forward guidance. These measures helped to slow down economic growth and reduce inflationary pressures, which in turn helped to maintain a stable and healthy economy.
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You have been asked to review a capital investment proposal. The cost of the project is $2,775,000. Cash receipts are projected to be $925,000 in year 1: $1,000,000 in year 2; $1,000,000 in year 3; $1,000,000 in year 4; and $1,225,000 in year 5. Suppose your company discounts capital projects at 13.5%. What is the NPV of the project? (7 points
Answers
The cost of the project is $2,775,000, with cash receipts projected to be $925,000 in year 1:
$1,000,000 in year 2; $1,000,000 in year 3; $1,000,000 in year 4; and $1,225,000 in year 5.
Your company discounts capital projects at 13.5%.
The NPV of the project is the sum of the present values (PV) of the expected cash inflows and outflows.
The PV of the outflows is the project's initial investment; the PV of the inflows is the sum of the expected cash inflows discounted to their present value at the project's cost of capital.
Let's calculate the NPV of the project using the following formula:
NPV = CF1 / (1 + r)^1 + CF2 / (1 + r)^2 + ... + CFn / (1 + r)^n - Cost of investment,
Where, CF1, CF2, CF3, CF4, CF5 are the cash inflows in years 1, 2, 3, 4, and 5, respectively.
r = 13.5%
Cost of the investment = $2,775,000
NPV = (925,000 / (1 + 0.135)^1) + (1,000,000 / (1 + 0.135)^2) + (1,000,000 / (1 + 0.135)^3) + (1,000,000 / (1 + 0.135)^4) + (1,225,000 / (1 + 0.135)^5) - 2,775,000
NPV = $196,961.31
Therefore, the NPV of the project is $196,961.31.
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This assignment requires students to analyse a case relevant to the conditions being experienced in the restaurant industry as it pertains to connecting organizational culture, diversity, values, attitudes, motivation, accountability, and talent management.
Required Materials
Konrad, A & Birbrager, L (2020). Gusto 54: Creating a Culture of Ownership and Accountability. Ivey Publishing.
Instructions
Thoroughly read the case. It is recommended that you read 2-3 times.
Prepare a 5-page report (12-point font, double spaced not including the title page or reference page), that addresses the following questions:
As of January 2020, what is Gusto 54’s competitive advantage? If COVID-19 had never happened, would you have believed that the group would be able to maintain this advantage? Why or why not?
How would you define Gusto 54’s culture as of January 2020? Does your definition vary throughout the case?
What role does values, attitudes, and diversity play at Gusto 54? Do you consider the values, attitudes, and diversity to be a strength or weakness at Gusto 54?
Do you agree or disagree with the steps that Gusto 54 took to build its "people-first"culture? Why or why not? What are the key challenges facing Gusto 54 in January 2020 (before awareness of the upcoming COVID-19 pandemic)?
If COVID-19 had never happened, which challenge would have been Gusto 54’s largest barrier to continued growth? How would you suggest the group tackle this challenge?
Answers
Using the data from the case, describe the culture at Gusto 54 as of January 2020. Describe the main obstacles Gusto 54 was facing prior to the COVID-19 epidemic. These might have to do with management, retaining talent, competition, etc.
Give an explanation of Gusto 54's competitive advantage in the restaurant sector as of January 2020 in this area. The menu's originality, the setting, the level of customer service, etc.
Discuss if you think Gusto 54's competitive edge would have persisted if the COVID-19 epidemic hadn't occurred. Consider market trends, client preferences, and the internal strengths and weaknesses of the organization as you defend your position.
Identify any shifts in how the company's culture is viewed during the course of the case. For instance, if there is proof that cultural shifts have occurred as a result of difficulties or strategic adjustments.
Consider how the company's beliefs, staff behaviors, and diversity affect how it operates and succeeds.
Decide if Gusto 54 has these qualities to its advantage or disadvantage. Back up your conclusion.
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A common stock is trading at $15 per share. Its dividends are paid on an annual basis. The most recent dividend per share (just paid yesterday) 92.6 cents per share. If the stock’s expected future growth of dividends (indefinitely) is 8%, what is the required rate of return on the stock?
Answers
A common stock is trading at $15 per share. The required rate of return on the stock is approximately 14.1733%.
To calculate the required rate of return on the stock, we can use the Gordon Growth Model, also known as the Dividend Discount Model (DDM):
Required Rate of Return = (Dividend / Stock Price) + Dividend Growth Rate
Given information:
Stock price (P) = $15 per share
Dividend (D) = 92.6 cents per share = $0.926 per share
Dividend Growth Rate (g) = 8% per year (in decimal form, g = 0.08)
Using the Gordon Growth Model:
Required Rate of Return = (Dividend / Stock Price) + Dividend Growth Rate
Required Rate of Return = ($0.926 / $15) + 0.08
Required Rate of Return = 0.061733 + 0.08
Required Rate of Return = 0.141733
Converting to percentage:
Required Rate of Return = 14.1733%
Therefore, the required rate of return on the stock is approximately 14.1733%.
Based on the given information and calculations, the required rate of return on the stock is approximately 14.1733%.
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Which of the following statements is NOT true regarding the development of a reward system?
Select one:
a. The key benefit of a profit-sharing plan is to encourage employees to think like owners.
b. The key benefit of an individual-based incentive system is to highlight improved expectancy and instrumentality.
c. The key benefit of gain-sharing plan is to introduce equity, ensuring the employees who contribute to the business can get a share of the gains.
d. The key benefit of an employee share plan is to reduce free-riding problems.
Answers
The statement which is NOT true regarding the development of a reward system is "The key benefit of an employee share plan is to reduce free-riding problems."What is a reward system?A reward system is an organizational method for rewarding, recognizing, and compensating employees in return for their good performance or work done.
A compensation system usually includes pay and benefits such as health care, retirement plans, bonuses, profit sharing, and other reward options.Reward system and benefits are based on several factors such as job content, organizational structure, and objectives. A benefit system is often used to attract, retain and motivate employees.Key Benefits of different reward systems are as follows:a.
The key benefit of a profit-sharing plan is to encourage employees to think like owners.b. The key benefit of an individual-based incentive system is to highlight improved expectancy and instrumentality.c. The key benefit of gain-sharing plan is to introduce equity, ensuring the employees who contribute to the business can get a share of the gains.d. The key benefit of an employee share plan is to reduce free-riding problems. The above options are the key benefits of different reward systems, and all of them are true, except for option d, which is incorrect because the key benefit of the employee share plan is to promote employee ownership culture, rather than reducing free-riding problems.\
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Which of the following is true when an economy is at its potential GDP? a Only structural unemployment as a result of technological changes will exist in the economy. b The unemployment rate will be greater than 0%. c Only frictional unemployment will exist in the economy. d The unemployment rate will be 0%. e The labour force participation rate will be 100%.
Answers
The correct statement when an economy is at its potential GDP is that only frictional unemployment will exist in the economy, and the unemployment rate will be greater than 0%. Therefore the correct option to the given statement is C Only frictional unemployment will exist in the economy. and D The unemployment rate will be 0%
When an economy operates at its potential GDP, it means that it is producing its maximum level of output without causing inflationary pressures or overheating. At this level of output, the economy is considered to be at full employment. However, full employment does not imply zero unemployment.
Frictional unemployment is a type of unemployment that exists even at full employment. It arises from the natural process of workers searching for new and better job opportunities. When individuals voluntarily leave their current jobs to seek new employment, they become temporarily unemployed until they find suitable positions. This type of unemployment is considered to be a normal and healthy part of a dynamic and improving economy.
Therefore, at the potential GDP level, only frictional unemployment will exist because other types of unemployment, such as cyclical or structural unemployment, are minimized. The unemployment rate will still be greater than 0% due to the presence of frictional unemployment.
In conclusion, when an economy is at its potential GDP, the statement "Only frictional unemployment will exist in the economy. The unemployment rate will be greater than 0%" is true. Frictional unemployment is a natural part of a healthy economy, and even at full employment, there will be individuals in transition between jobs, resulting in a positive unemployment rate.
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You are evaluating a project that will require an investment of $18 million that will be depreciated over a period of 15 years. You are concerned that the corporate tax rate will increase during the life of the project.
Would it increase the Financial break-even point?
Answers
The statement is Yes, the financial break-even point would increase if the corporate tax rate increases during the life of the project.
The financial break-even point is the point at which a business generates enough revenue to cover all of its fixed and variable expenses, but not enough to generate a profit. In other words, it is the minimum amount of revenue that a company must generate in order to avoid a loss. In the given situation, if the corporate tax rate increases during the life of the project, it will increase the fixed expenses of the project. Depreciation is one of the fixed expenses which is calculated by using a fixed percentage of the asset value, so any increase in tax rate will increase the depreciation expenses. As depreciation is a tax-deductible expense, an increase in tax rate will result in a decrease in tax shield which in turn will increase the financial break-even point. In conclusion, if the corporate tax rate increases during the life of the project, it would increase the financial break-even point, as fixed expenses like depreciation, which have tax shield benefits, would be reduced and thus raise the financial break-even point.
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Assume Highline Company has just paid an annual dividend of $1.09.
Analysts are predicting an 11.8% per year growth rate in earnings over the next five years. After then, Highline's earnings are expected to grow at the current industry average of 5.6% per year. If Highline's equity cost of capital is 8.1% per year and its dividend payout ratio remains constant, for what price does the dividend-discount model predict Highline stock should sell?
The value of Highline's stock is
(Round to the nearest cent.)
Answers
The dividend-discount model predicts that Highline stock should sell for approximately $17.77. To determine the predicted price of Highline stock using the dividend-discount model, we need to calculate the present value of future dividends.
Given the annual dividend of $1.09, an 11.8% growth rate in earnings over the next five years, and a 5.6% growth rate thereafter, we can calculate the expected dividends for the next five years and the subsequent years. By discounting these dividends at the equity cost of capital of 8.1% per year, we can find the present value of future dividends. Summing up the present values gives us the predicted price of the stock, which is approximately $17.77.
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Reflect on your experiences as a student in this subject. With reference to relevant organisational behaviour literature, identify and discuss two types of power you exercised during group work and provide an example of each (6 marks). Explain two ways to enhance your power as a student at university (4 marks).
Answers
The type of power that individuals can exercise during group work based on organizational behavior literature.
Two types of power that can be exercised during group work are:
1. Expert power: This type of power is based on an individual's knowledge, skills, and expertise in a particular area. When a student possesses expert power, they are seen as credible and knowledgeable, and others in the group may defer to their judgment or rely on their expertise. For example, a student who excels in statistics may exercise expert power by guiding the group in analyzing and interpreting data for a research project.
2. Referent power: Referent power is based on an individual's charisma, likability, and ability to establish strong relationships with others. When a student has referent power, their peers are influenced by their positive qualities, admire and respect them, and are motivated to follow their lead. For instance, a student who is well-liked and has excellent interpersonal skills may exercise referent power by effectively facilitating group discussions and fostering a positive team dynamic.
To enhance power as a student at university, two ways could be:
1. Developing expertise: By continuously building knowledge and skills in a specific area, such as through additional coursework, research projects, or practical experience, a student can enhance their expert power. This can involve staying updated with relevant literature, attending seminars or workshops, and seeking opportunities for hands-on learning.
2. Building relationships and networking: Establishing connections with professors, classmates, and professionals in the field can enhance referent power. Actively participating in class discussions, joining student organizations, attending networking events, and seeking mentorship can help students expand their networks and develop strong relationships, which can increase their influence and power within the university context.
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Suppose that a local airport is near a residential neighborhood. To land at this airport, an airliner must pay $100. To soundproof the local homes, so residents do not hear airplanes all hours of the day, residents must pay $44. What is the private cost for a plane to land at this airport? What is the external cost of a plane landing at the airport? What is the social cost of a plane landing at the airport?
Answers
The private cost, the external cost, and the social cost of an airplane landing at an airport near a residential neighborhood can be explained as follows: Private cost refers to the direct cost that the business or consumer pays.
The private cost for a plane to land at this airport is $100. It is the cost that airlines must pay to land at the airport. This cost includes landing fees, parking fees, and other related fees.The external cost refers to the indirect cost of a transaction or activity that is not reflected in the market price. The external cost of a plane landing at the airport is $44. It is the cost borne by residents of the local community due to noise pollution and other environmental factors caused by airplanes flying over their homes. The external cost can be further divided into two categories: negative externalities and positive externalities.
The social cost refers to the total cost of a transaction or activity to society as a whole. The social cost of a plane landing at the airport is $144. It includes the private cost of the plane landing at the airport plus the external cost borne by the local residents. Social cost can be used to determine the true cost of an activity or transaction, taking into account both the direct and indirect costs. In a long answer, this can be elaborated more by describing the measures that can be taken to mitigate the external costs to the environment and the residents such as using more noise-efficient planes or installing better soundproofing systems in the homes.
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1. Change the total fixed manufacturing overhead cost for the Milling Department in Data area back to $390,000, keeping all of the other data the same as in the original example. Consider a new job, Job 408, with the following characteristics:
Answers
The total manufacturing cost of Job 408 is $10,040.
To change the total fixed manufacturing overhead cost for the Milling Department in Data area back to $390,000 while keeping all of the other data the same as in the original example, you can adjust the predetermined overhead rate calculation.
The predetermined overhead rate is calculated as follows:
Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated total amount of the allocation base
In the original example, the predetermined overhead rate is calculated as follows:
Predetermined overhead rate = $450,000 / 150,000 machine-hours= $3.00 per machine-hour
If you want to change the total fixed manufacturing overhead cost for the Milling Department in Data area back to $390,000, you can adjust the estimated total manufacturing overhead cost to reflect this new amount. Therefore, the new predetermined overhead rate would be calculated as follows:
New predetermined overhead rate = $390,000 / 150,000 machine-hours= $2.60 per machine-hour
Now, let's consider the new job, Job 408, with the following characteristics:
Direct materials cost = $5,000
Direct labor cost = $4,000
Machine-hours required = 400
To calculate the total manufacturing cost of Job 408, we need to use the predetermined overhead rate we just calculated and apply it to the machine-hours required for the job. Total manufacturing cost of Job 408 = Direct materials cost + Direct labor cost + (Machine-hours required x Predetermined overhead rate)= $5,000 + $4,000 + (400 x $2.60)= $5,000 + $4,000 + $1,040= $10,040
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The initial endowments of individuals A and B are given by (A, ŷA) = (2, 2) and (B, ŷB) = (6,6), respectively. UA (XA, YA) = x²y₁ and U₂(XB, YB) = YB — 0.5(8 - x)² represent their respective preferences. Note that the Marginal Rate of Substitutions, following the notations we used in class, are given by: (≤0x/0y if x₁ = 0, YA > 0 MRSA = 2yA/XA = Ox/oy if XA > 0, YA > 0 and MRSB = 8 - XB (≤0x/0y if XB = 0, YB > 0 Ox/oy if XB > 0, YB > 0 ≥ 0x/0y if XB > 0, YB = 0 = ≥ 0x/σy if XA > 0, YA = 0 (a) Determine all the Pareto optimal allocations and depict them in an Edgeworth box diagram. (b) Determine the competitive equilibrium price, and the corresponding allocation. (c) Determine whether the following allocations are Pareto optimal. If it is, find the decentralizing price ratio. If it is not, suggest a Pareto superior allocation that makes both persons strictly better off. (i) (XA, YA) = (6, 8) and (XB, YB) = (2,0) (ii) (XA, YA) = (8, 2) and (xB, YB) = (0,6)
Answers
a) The contract curve passes through (2, 6) and (6, 2),
b) The competitive equilibrium allocation is (4, 4).
c) A Pareto superior allocation that makes both individuals better off is (XA, YA) = (8, 5) and (XB, YB) = (0, 3), which lies on the contract curve and gives both individuals higher utility.
(a) All Pareto optimal allocations lie on the contract curve, which is the set of points at which the MRS of the two individuals are equal.
(b) The competitive equilibrium price is the ratio of the marginal utilities of the goods. At an allocation (x, y), the price ratio is given by MRS_A = MRS_B. Therefore, 2yA/x = 8 - x or x = 2yA/(MRS_A + 2) = 8 - 2yB/(MRS_B + 2). Solving these equations yields x = 4 and y = 4.
(c) For allocation (i), MRS_A = 16/6 and MRS_B = 0. Thus, this allocation is not Pareto optimal. A Pareto superior allocation that makes both individuals better off is (XA, YA) = (5, 8) and (XB, YB) = (3, 0), which lies on the contract curve and gives both individuals higher utility.
For allocation (ii), MRS_A = 0 and MRS_B = 16/6. Thus, this allocation is not Pareto optimal.
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Autotrade plc acquired 90% of Socrates Ltd on 1 January 20X6 when the carrying amount of the net assets of Socrates Ltd was $22m (i.e. share capital $10m, retained earnings $12m).
It has been identified that a building of Socrates had a value of $6m in excess of its book value and a useful life of 10 years on the acquisition date.
Furthermore, Socrates has an internally generated brand with a fair value of $2m and a useful life of 4 years on 1 January 20X6 that is not recognised in Socrates individual financial statements.
The consideration transferred was as follows:
6m shares in Autotrade plc issued on 1 January 20X6 when the market price of Autotrade plc’s shares was $3.50.
$5m payment of cash on the acquisition date.
A further payment of cash of $13m on 31 December 20X7. A discount factor of 10%
should be used.
$2m payable if Socrates profits achieve at least 5% growth in profits over the next 3
years. The fair value of the cash payment is $0.5m.
The fair value of NCI in Socrates (i.e. 10%) was valued at $4m.
Socrates’ retained earnings are $19m on 31 December 20X6. On the same date, an impairment loss of $5m shall be recognised against goodwill. The non-controlling interest
4
and goodwill arising on the acquisition of Socrates were calculated using the fair value method.
Requirement:
a) Show subsidiary’s net assets relevant working.
b) Calculate the carrying amount of goodwill 31 December 20X6.
c) Calculate the NCI on 31 December 20X6.
d) Explain whether the recognition of subsidiary’s identifiable net assets at fair value at
the date of acquisition consists of a choice of accounting policy.m
Answers
a) Net assets of Socrates on the date of acquisition is $22 million. In addition, a building of Socrates had a value of $6m in excess of its book value and a useful life of 10 years on the acquisition date.
Furthermore, Socrates has an internally generated brand with a fair value of $2m and a useful life of 4 years on 1 January 20X6 that is not recognized in Socrates individual financial statements. Therefore, the net assets of Socrates would be: Share capital 10mRetained earnings 12mBuilding 6mInternally generated brand 2mTotal net assets 30mSocrates net assets acquired by Auto trade (90%) = 30m*0.9 = $27mNCI (10%) = 30m*0.1 = $3mb) The carrying amount of goodwill on December 31, 20X6, would be the difference between the total consideration transferred to Auto trade ($52m) and the fair value of the net assets of Socrates ($27m). Thus, Goodwill on December 31, 20X6 = 52m - 27m = $25mc) The NCI on December 31, 20X6, would be $3md) No, the recognition of a subsidiary’s identifiable net assets at fair value at the date of acquisition does not consist of a choice of accounting policy. It is mandatory under IFRS 3 Business Combinations that a subsidiary's net assets are recognized at fair value. The recognition of a subsidiary’s identifiable net assets at fair value at the date of acquisition is not a choice of accounting policy, it is required.
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There are two stocks in the market, stock A and stock B. The price of stock A today is $50. The price of stock A next year will be $40 if the economy is in a recession, $55 if the economy is normal, and $60 if the economy is expanding. The probabilities of recession, normal times, and expansion are 0.1, 0.8, and 0.1 respectively. Stock A pays no dividend. Assume CAPM is true. The volatility of the return on the market portfolio OM is 10%. The expected return of stock B is 7% and the volatility of the return of stock B is 12%. Furthermore, the correlation between the return on stock A and the market portfolio return is 0.8, the correlation between the return on stock B and the market portfolio return is 0.54, and the correlation between the returns of the two stocks is 0.6. What is the beta of stock B?
Answers
To calculate the beta of stock B, we need to use the formula:
Beta(B) = Cov(RB, RM) / Var(RM)
Where:
Cov(RB, RM) is the covariance between the return on stock B and the market portfolio return.
Var(RM) is the variance of the market portfolio return.
Given the information provided, we have the following correlations:
Correlation between the return on stock B and the market portfolio return (ρ(B, M)) = 0.54
Correlation between the returns of stock A and stock B (ρ(A, B)) = 0.6
To calculate Cov(RB, RM), we can use the following formula:
Cov(RB, RM) = ρ(B, M) * σ(B) * σ(M)
Given the volatility (σ) of stock B (12%) and the volatility of the market portfolio (10%), we can substitute the values into the formula:
Cov(RB, RM) = 0.54 * 0.12 * 0.10 = 0.00648
Next, we need to calculate Var(RM). The volatility of the market portfolio (10%) can be used as the standard deviation (σ) of the market return. The variance (Var) can be calculated by squaring the volatility:
Var(RM) = (0.10)^2 = 0.01
Now we have all the necessary values to calculate the beta of stock B:
Beta(B) = Cov(RB, RM) / Var(RM) = 0.00648 / 0.01 = 0.648
Therefore, the beta of stock B is 0.648.
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