f the regression method indicated the intercept = $30 and the slope = $20 for a cost function, the

Q: The slope of the cost line on a graph represents: a) variable cost per unit. Ob) total fixed cost.…

A: Answer:-  Variable cost meaning:- An expense for the company that varies according on how much is…

Q: Assume Model 2 with D₁ = $2 and r= 10%. Calculate different Po's with g = 0%, 1%, , 3%, 4%, 5%, 6%,…

A: Dividend Discount Model (DDM) is a method used to value a stock by estimating its future dividend…

Q: a. If Sharon were risk neutral, which investment would she select? Explain why. b. If she were risk…

A: Risk Neutral-This type of investor is insensitive to risk i.e., while making investment decision,…

Q: Find the numerical value of the factor (A/P, 30%,22).

A: We have; Capital Recovery function (A/P,30%,22) To Find: Numerical Value of the Function

Q: What is the total variance of the following portfolio including 2 assets invested in the ratio of…

A: Formula to be used: Portfolio variance=(WA2 x σ2A)+(WB2 x σ2B)+ (2 x WA x σA x WB x σB x r) Data…

Q: Co-Variance of A & B is 28. Risk of Investment A is 5 while that of B is 6.25. Corelation will be…

A: Given:Co-Variance of A&B=28Risk of investment A=5Risk of investment B=6.25To…

Q: Discuss the difference between a price-weighted index and a value-weighted index. Give one example…

A: "Hi, Thanks for the Question. Since you asked multiple question, we will answer first question for…

Q: find the trynors ratio for q and compare it to treynor ratio for m does this analysis indicate…

A: Here,Beta q is 1.25rf is 2%rm is 12%rq is 13.5%

Q: Define the following terms: Factor risk premium Unit root Random walk with drift…

A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: Consider the generalised linear regression model: y = Xẞ + e, with E[e] = 0 and E[ee] = 022. Let the…

A: The objective of the question is to identify the incorrect statements about the OLS and GLS…

Q: 30. Based on the Regression result for KLIC, if Variance of the Residuals is equal 0.0126 and…

A: Variance of the Residual Risk=0.0126 And variance of SPY=0.0037

Q: I can use the regression beta as my estimate of beta in a valuation. True or false

A: Beta refers to the measurement of the volatility of stock related to the market as a whole. When…

Q: A linear regression model is Units = 4,004 – 0.659×Week. For week 46, what is the forecast for the…

A: Units = 4004 – 0.659 * WeekNumber of Weeks = 46

Q: The measures of risk include Geometric Mean Arithmetic Mean Median Variance

A: The risk is very important in the stock market and we must quantify the risk so that it can be…

Q: There are three assets with the rates of return r₁ = 214 +21B+1, 7₂ = -31₁+61B-2, 73 = 514-18 +4,…

A: To find the portfolio with the minimum variance, we need to solve the following optimization…

Q: Consider the generalised linear regression model: y = Xẞ + e, with E[e] = 0 and E[ee] = 022. Let the…

A: The question is asking us to evaluate the properties of the Ordinary Least Squares (OLS) and…

Q: 1. What percent of the area under the standard normal curve is within one standard deviation of…

A: The objective of the question is to find out the percentage of the area under the standard normal…

Q: 7. Which of the following charts best represent total variable costs? For each chart, the line…

A: Total variable cost which increases when number of production units increases I.e changing of…

Q: For the given cost function C(x) = 28900 + 500x + x², First, find the average cost function. Use it…

A: Average cost function  = C(x) / x = (28900+500x+x2)/x

Q: Under the stop-loss reinsurance model, suppose the total claim follows exponential distribution with…

A: Insurance firms frequently employ stop loss reinsurance as a risk management tactic to reduce their…

Q: Dividing the analysis amount by the base amount and multiplying the result by 100.

A: Common sized statements are those financial statements that are expressed only in terms of…

Q: 1 15% 21%

A: Give :XY15212636713-13-261115To calculate the arithmetic average returns for X and Y:For X:Average…

Q: Assuming that the rates of return associated with a given asset investment are normally distributed;…

A: a) Calculation of standard deviation:Standard deviation is 0.3516.Standard deviation can be derived…

Q: CM ratio = 1 ______ the Variable expense ratio. minus plus divided by multiplied by

A: Contribution margin ratio is the ratio between contribution margin and sales revenue. It is…

Q: ow were you able to find a D/V of 9.7% and D/V of 20%?

A: Debt is important and long term source of finance for companies and it is very cheap sources of…

Q: The independent variable in regression analysis is: Multiple Choice Usually expressed as a…

A: The objective of the question is to identify the correct definition or characteristic of the…

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.