(A) To determine: What action Murray is required to take into increase portfolios expected return Introduction Expected return stands to be the loss or profit, anticipated by the investor on the investment which represents its expected return. In other words, it is the estimation with respect to the value of investments which comprises of change in dividend, payment and price computed from the probability distribution curve.

Question

Stevens Textile Corporation's 2019 financial statements are shown below Balance Sheet as of December 31, 2019 (Thousands of Dollars) Cash $ 1,080 Accounts payable $ 4,320 Receivables 6,480 Accruals 2,880 Inventories 9,000 Line of credit 0 Total current assets $16,560 Notes payable 2,100 Net fixed assets 12,600 Total current liabilities $ 9,300 Mortgage bonds 3,500 Common stock 3,500 Retained earnings 12,860 Total assets $29,160 Total liabilities and equity $29,160 Income Statement for December 31, 2019 (Thousands of Dollars) Sales $36,000 Operating costs 34,000 Earnings before interest and taxes $ 2,000 Interest 160 Pre-tax earnings $ 1,840 Taxes (25%) 460 Net income $ 1,380 Dividends (40%) $ 552 Addition to retained earnings $ 828 Stevens grew rapidly in 2019 and financed the growth with notes payable and long-term bonds. Stevens expects sales to grow by 20% in the next year but will finance…

Answer 1

Question

Chapter 7, Problem 3CP

Summary Introduction

(A)

To determine:

What action Murray is required to take into increase portfolios expected return

Introduction

Expected return stands to be the loss or profit, anticipated by the investor on the investment which represents its expected return. In other words, it is the estimation with respect to the value of investments which comprises of change in dividend, payment and price computed from the probability distribution curve.

Summary Introduction

(B)

To determine:

What action Murray is required to take in order to decrease exposure of risk in his portfolio without engaging in lending or borrowing activities

Introduction:

Stock stands to be the general term which is taken into consideration for describing the company's ownership certificates. On the other hand share refers to the company's stock certificate. When a share of a particular company is held by an investor, he is known as a shareholder.

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