Stock a has an expected return of 12%, a beta of 1.2, and a standard deviation of 20%. stock b also has a beta of 1.2, but its expected return is 10% and its standard deviation is 15%. portfolio ab has $900,000 invested in stock a and $300,000 invested in stock b. the correlation between the two stocks' returns is zero (that is, ra, b = 0). which of the following statements is correct?

a. portfolio ab's expected return is 11.0%.

b. portfolio ab's beta is less than 1.2.

c. portfolio ab's standard deviation is 17.5%.

d. the stocks are not in equilibrium based on the capm; if a is valued correctly, then b is overvalued.

e. the stocks are not in equilibrium based on the capm; if a is valued correctly, then b is undervalued.

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Insurance companies have internal controls in place to protect assets, monitor the accuracy of accounting records and encourage operational efficiencies and adherence to policies. these internal controls are generally of two types: administrative controls and accounting controls. administrative controls are the policies and procedures that guide the daily actions of employees. accounting controls are the policies and procedures that delineate authorizations of financial transactions that are done, safeguard assets, and provide reports on the company’s financial status in a reliable and timely manner. internal controls should include both preventative and detective controls. the purpose of preventative controls is to stop problems and errors before they occur. detective controls identify problems after they have occurred. preventative controls are usually more effective at reducing problems, but they also tend to be more expensive. internal controls must be flexible to adjust for changes in laws and regulations in addition to adding new products or modifying current ones. companies must also do regular analyses to ensure that the benefits of implementing the controls are worth their costs. when concerned about paying unwarranted insurance claims which type of control would be useful?

Ashop owner uses a reorder point approach to restocking a certain raw material. lead time is six days. usage of the material during lead time is normally distributed with a mean of 42 pounds and a standard deviation of four pounds. when should the raw material be reordered if the acceptable risk of a stockout is 3 percent?

Which of the following is usually not one of the top considerations in choosing a country for a facility location? a. availability of labor and labor productivityb. attitude of governmental unitsc. location of marketsd. zoning regulationse. exchange rates