You Own a Portfolio That Is Invested 50% in a Risk-Free

question 38

Multiple Choice

You own a portfolio that is invested 50% in a risk-free asset and 50% in a stock that is equally as risky as the market. The risk-free asset has an expected return of 5%. Your portfolio has an
Expected return of 8.80%. What is the expected return on the market?

• A) 11.60%
• B) 11.75%
• C) 12.30%
• D) 12.35%
• E) 12.60%

Understand the distinctions between product costs and period costs.

Identify and classify the components of prime cost and conversion cost.

Calculate the cost of goods sold and understand its implications on financial statements.

Distinguish between variable and fixed costs in the context of product and period cost classifications.

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Definitions:

Days' Sales in Inventory

A financial metric indicating the average number of days a company takes to sell its inventory.

Statement of Financial Position

Another term for a balance sheet, which is a financial document that provides a snapshot of an entity’s assets, liabilities, and shareholders' equity at a specific point in time.

Statement of Comprehensive Income

A financial statement that includes all changes in equity during a period except those resulting from investments by owners and distributions to owners, encompassing both net income and other comprehensive income items.

Average Inventory

The average stock of goods held over a certain period, calculated to understand inventory levels better.