1 of 38
Term
Which of the following statements is correct?
- Sole proprietorships are easy to start.
- If the sole proprietorship gets sued, the owner is not liable.
- It is relatively easy for sole proprietorships to raise money.
- Profits from the sole proprietorship are subject to double taxation
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sole proprietorships are easy
money markets
to start
offer the managers an equity stake Accountants are focused on what
in the firm happened in the past
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, 2 of 38
Term
From the perspective of ownership risk, the best form of business
organization is the:
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corporation board of directors
general partnership sole proprietorship
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3 of 38
Term
The past five monthly returns for PG&E are −3.25 percent, 4.08
percent, 3.85 percent, 6.59 percent, and 3.66 percent. Compute the
standard deviation of PG&E's monthly returns.
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Average return = Sum of all
returns/Number of returns **Excel
= (−3.35% + 4.33% + 3.95% + 6.74% + = stdev.s (
3.76%) / 5 = 3.68%
Average return = 3.086%
, Average return = Sum of all
**Excel returns/Number of returns
= stdev.s ( = (3.78% + 4.22% − 1.92% + 9.37% −
= 4.86% 2.80%) / 5
Average return = 2.530%
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4 of 38
Term
An investor owns $8,500 of Adobe Systems stock, $9,500 of Dow
Chemical, and $9,500 of Office Depot. What are the portfolio
weights of each stock?
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Total portfolio= $8,500 + $9,500 + $9,500 = $27,500
Adobe System weight= $8,500 / $27,500 = 0.3091
Dow Chemical weight= $9,500 / $27,500 = 0.3455
Office Depot weight= $9,500 / $27,500 = 0.3455
New portfolio beta = SUM(return * beta)
= (0.82 × 1.77) + (0.18 × 0.93)
New portfolio beta = 1.62
, Total portfolio= $7,000 + $4,000 + $9,000 = $20,000
News Corp weight= $7,000 / $20,000 = 0.3500
First Data weight= $4,000 / $20,000 = 0.2000
Whirlpool weight= $9,000 / $20,000 = 0.4500
Portfolio return= SUM (weights * returns)
= (0.3500 × 8.40%) + (0.2000 × −2.63%) + (0.4500 × 10.53%)
Portfolio return = 7.15%
Total portfolio= $9,000 + $5,000 + $6,000 = $20,000
General Dynamics weight= $9,000 / $20,000 = 0.4500
Starbucks weight= $5,000 / $20,000 = 0.2500
Nike weight= $6,000 / $20,000 = 0.3000
Portfolio return= SUM (weights * returns)
= (0.4500 × 6.20%) + (0.2500 × −1.40%) + (0.3000 × −0.56%)
Portfolio return = 2.27%
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5 of 38
Definition
Dollar return = (Ending value - Beginning value) + Income
= $129.49 x 490 - $126.19 x 490 + $2.00 x 490
Dollar return = $2,597
Percentage return = Dollar return/Beginning value
= $2,597 / ($126.19 x 490)
Percentage return = 4.20%
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Term
Which of the following statements is correct?
- Sole proprietorships are easy to start.
- If the sole proprietorship gets sued, the owner is not liable.
- It is relatively easy for sole proprietorships to raise money.
- Profits from the sole proprietorship are subject to double taxation
Give this one a try later!
sole proprietorships are easy
money markets
to start
offer the managers an equity stake Accountants are focused on what
in the firm happened in the past
Don't know?
, 2 of 38
Term
From the perspective of ownership risk, the best form of business
organization is the:
Give this one a try later!
corporation board of directors
general partnership sole proprietorship
Don't know?
3 of 38
Term
The past five monthly returns for PG&E are −3.25 percent, 4.08
percent, 3.85 percent, 6.59 percent, and 3.66 percent. Compute the
standard deviation of PG&E's monthly returns.
Give this one a try later!
Average return = Sum of all
returns/Number of returns **Excel
= (−3.35% + 4.33% + 3.95% + 6.74% + = stdev.s (
3.76%) / 5 = 3.68%
Average return = 3.086%
, Average return = Sum of all
**Excel returns/Number of returns
= stdev.s ( = (3.78% + 4.22% − 1.92% + 9.37% −
= 4.86% 2.80%) / 5
Average return = 2.530%
Don't know?
4 of 38
Term
An investor owns $8,500 of Adobe Systems stock, $9,500 of Dow
Chemical, and $9,500 of Office Depot. What are the portfolio
weights of each stock?
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Total portfolio= $8,500 + $9,500 + $9,500 = $27,500
Adobe System weight= $8,500 / $27,500 = 0.3091
Dow Chemical weight= $9,500 / $27,500 = 0.3455
Office Depot weight= $9,500 / $27,500 = 0.3455
New portfolio beta = SUM(return * beta)
= (0.82 × 1.77) + (0.18 × 0.93)
New portfolio beta = 1.62
, Total portfolio= $7,000 + $4,000 + $9,000 = $20,000
News Corp weight= $7,000 / $20,000 = 0.3500
First Data weight= $4,000 / $20,000 = 0.2000
Whirlpool weight= $9,000 / $20,000 = 0.4500
Portfolio return= SUM (weights * returns)
= (0.3500 × 8.40%) + (0.2000 × −2.63%) + (0.4500 × 10.53%)
Portfolio return = 7.15%
Total portfolio= $9,000 + $5,000 + $6,000 = $20,000
General Dynamics weight= $9,000 / $20,000 = 0.4500
Starbucks weight= $5,000 / $20,000 = 0.2500
Nike weight= $6,000 / $20,000 = 0.3000
Portfolio return= SUM (weights * returns)
= (0.4500 × 6.20%) + (0.2500 × −1.40%) + (0.3000 × −0.56%)
Portfolio return = 2.27%
Don't know?
5 of 38
Definition
Dollar return = (Ending value - Beginning value) + Income
= $129.49 x 490 - $126.19 x 490 + $2.00 x 490
Dollar return = $2,597
Percentage return = Dollar return/Beginning value
= $2,597 / ($126.19 x 490)
Percentage return = 4.20%
Give this one a try later!
