Ken Howard Has a Two Stock Portfolio Consisting of Acton

question 49

Multiple Choice

Ken Howard has a two stock portfolio consisting of Acton Inc. and Boron Corp. Assume the following conditions exist. $\begin{array}{l}\text {Return on the market }&=13 \% \\\text {3 month Treasury bill rate }&=6 \% \\\text { Acton's beta}&=1.15 \\\text {Boron's beta }&=1.40\\\text { Market value of Ken's investment in Acton}&=\$ 125,000 \\\text {Market value of Ken's investment in Boron }&=\$ 250,000 \\\text { }&\$ 375,000\end{array}$ What does the SML predict is Ken's required rate of return for the overall portfolio?

• A) 15.24%
• B) 14.93%
• C) 23.12%
• D) 20.90%

Compare and contrast individual versus group incentive systems, including profit sharing and gainsharing.

Understand the principles of productivity measurement systems like ProMES and their impact on organizational performance.

Analyze the effectiveness of performance evaluation methods and their connection to strategic HR objectives.

Comprehend the role of skill- and knowledge-based pay systems in motivating employees.

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Definitions:

Functional Currency

The currency of the primary economic environment in which an entity operates, usually determined by the currency in which it predominantly generates and expends cash.

Balance Sheet

A financial statement that shows a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a snapshot of its financial condition.

U.S. Dollars

The official currency of the United States, widely used as a standard or reference currency in international transactions.

Functional Currency

The primary currency of the primary economic environment in which an entity operates, typically used in its financial reporting.