Expected returns
stocks a and b have the following probability distributions of expected future returns:

col1 probability 0.2 0.2 0.3 0.2 0.1
col2 a -6% 6 15 23 34
col3 b -40% 0 24 27 27

calculate the expected rate of return, rb, for stock b (ra = 12.50%.) do not round intermediate calculations. round your answer to two decimal places.
%
calculate the standard deviation of expected returns, σa, for stock a (σb = 27.80%.) do not round intermediate calculations. round your answer to two decimal places.
%

now calculate the coefficient of variation for stock b. round your answer to two decimal places.
is it possible that most investors might regard stock b as being less risky than stock a?
if stock b is more highly correlated with the market than a, then it might have a higher beta than stock a, and hence be less risky in a portfolio sense.
if stock b is more highly correlated with the market than a, then it might have a lower beta than stock a, and hence be less risky in aportfolio sense.
if stock b is more highly correlated with the market than a, then it might have the same beta as stock a, and hence be just as risky in a portfolio sense.
if stock b is less highly correlated with the market than a, then it might have a lower beta than stock a, and hence be less risky in a portfolio sense.
if stock b is less highly correlated with the market than a, then it might have a higher beta than stock a, and hence be more risky in a portfolio sense.

Ummit record company is negotiating with two banks for a $157,000 loan. fidelity bank requires a compensating balance of 24 percent, discounts the loan, and wants to be paid back in four quarterly payments. southwest bank requires a compensating balance of 12 percent, does not discount the loan, but wants to be paid back in 12 monthly installments. the stated rate for both banks is 9 percent. compensating balances will be subtracted from the $157,000 in determining the available funds in part a. a-1. calculate the effective interest rate for fidelity bank and southwest bank. (do not round intermediate calculations. input your answers as a percent rounded to 2 decimal places.) a-2. which loan should summit accept? southwest bank fidelity bank b. recompute the effective cost of interest, assuming that summit ordinarily maintains $37,680 at each bank in deposits that will serve as compensating balances

Onsider the following subscription behavior information from genie, a web site that provides tools for constructing a family tree (ancestor search). subscriptions cost $9.99 per month, but you are charged for the entire year at the time of purchase. there is a one-year minimum term when you sign up for the service. once purchased, subscriptions are set to renew automatically unless the subscriber cancels them. when a membership renews, it renews for a one-year term and again you are charged for the entire year. there are no variable costs associated with providing this service to an individual customer, but genie does engage in customer relationship activities that they believe will increase customer retention. these customer relationship activities cost genie about $10 per year per customer. based on a sample of 1000 customers that joined genie five years ago, near the time when the company was founded, they were able to determine how many of those customers remained subscribers in the second year, third year etc. based on this information, genie calculated the average annual retention rate to be 20%. genie uses an annual discount rate of 8%. a. last year, genie spent $10,000 placing advertisements on google. genie management believes that these advertisements were responsible for about 300 new subscribers. would you recommend to genie management that they purchase more google ads? b. suppose a newly-introduced loyalty program increases the number of customers that remained to 30%. does this new data change your answer to 9.a? c. do you have any hesitations or concerns about making recommendations to management based on your above estimate of customer lifetime value?

Schuepfer inc. bases its selling and administrative expense budget on budgeted unit sales. the sales budget shows 1,800 units are planned to be sold in march. the variable selling and administrative expense is $4.30 per unit. the budgeted fixed selling and administrative expense is $35,620 per month, which includes depreciation of $2,700 per month. the remainder of the fixed selling and administrative expense represents current cash flows. the cash disbursements for selling and administrative expenses on the march selling and administrative expense budget should be: