Consider the following scenario analysis: Scenario Recession Normal economy Boom Rate of Return Probability Stocks Bonds 0.30 -5% 18% 0.60 19% 7% 0.10 24% 7% a. Is it reasonable to assume that Treasury bonds will provide higher returns in recessions than in booms? b. Calculate the expected rate of return and standard deviation for each investment. c. Which investment would you prefer?

Q: Why would it

A: Internal Control:   Internal control refers to the policies, and plans of the business organization…

Q: Give two examples of errors of principle?

A: Errors of principle refers to errors that are carried out at time of noting down transactions…

Q: Why does the FASB recommend the direct method over the indirect method?

A: Definition:   Financial accounting standards board (FASB): This is the organization that creates,…

Q: 6600 is not the answer

A: Child Tax Credit is $3,600 for children aged 6 and Under at end of 2021 Child Tax Credit is $3,000…

Q: The Sarbanes-Oxley Act requires the following?

A: Sarbanes-Oxley Act is formulated during 2002 under US federal law. The prime purpose of the act is…

Q: Question 8

A: When net credit sales is divided with average accounts receivable it results in receivable turnover…

Q: nonrecurring

A: Extraordinary things vs. Nonrecurring Items: an summaryExtraordinary things area unit gains or…

Q: Req C is incorrect.

A: Equivalent unit of production is multiplied by cost per equivalent unit to compute the assignment of…

Q: Explain preemptive right

A: Answer: A pre-emptive right is a benefit that can be granted to other owners in a company that gives…

Q: Explanation 1031 like-kind exchange

A:

Q: Why is a preemptive right important?

A: Preemptive rights means the rights to  be offered to purchase a property before it is offered to…

Q: True or false: IFRS is based on the same characteristics of information as AspE

A: IFRS:It stands for International Financial Reporting Standards, a set of accounting standards…

Q: Explain rebalance

A: Rebalancing is the strategy for realigning portfolio weightings. Rebalancing incorporates buying or…

Q: Which are the disadvantage of a C corp?

A: C corporation is the corporation that is taxed separately from its owners or shareholders.  In other…

Q: nother wrong answer

A: The Annual Percentage Rate: The annual percentage rate is the nominal rate quoted by financial…

Q: What Constitutes a Discontinued Operation?

A: Income statement: The financial statement which reports revenues and expenses from business…

Q: Still do not. Understand, why type of annuitie is used?

A: The question is a follow-up question, and, the learner has reposted it to clear the confusion so…

Q: All of these say incorrect.

A: An expense that benefits more than one product and for which the contribution to each product cannot…

Q: utio

A: In general, a "eligible rollover distribution" is any payment paid in a lump sum or over a period of…

Q: why would it not be option A

A: The T1 personal tax return is the tax return form required to be filed by all taxpayers in Canada.…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.