A) the sharpe ratio if the portfolio tells us how much our expected return will increase for a given increase in volatility. b) we should continue to trade securities until the expected return of each security equals its required return. c) the required return is the expected return that is necessary to compensate for the risk that an investment will contribute to the portfolio. d) if security i’s required return exceeds its expected return, then adding more of it will improve the performance of the portfolio.

Make or buy eastside company incurs a total cost of $120,000 in producing 10,000 units of a component needed in the assembly of its major product. the component can be purchased from an outside supplier for $11 per unit. a related cost study indicates that the total cost of the component includes fixed costs equal to 50% of the variable costs involved. a. should eastside buy the component if it cannot otherwise use the released capacity? present your answer in the form of differential analysis. use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers. cost from outside supplier $answer variable costs avoided by purchasing answer net advantage (disadvantage) to purchase alternative $answer b. what would be your answer to requirement (a) if the released capacity could be used in a project that would generate $50,000 of contribution margin? use negative sign represent a net disadvantage answer; otherwise do not use negative signs with your answers.