Macroeconomics Supply and Pricing

Questions: 1.Explain the purposes for Australias flooding lodging prices.2.Detail macroeconomic arrangements the legislature can embrace to guarantee reasonable lodging for the youngergeneration. Answers: 1. As indicated by the basics of financial matters, the interest, gracefully and estimating of any thing or administrations are interlinked with one another. By applying the equivalent monetary idea, the explanations for the flooding lodging costs in Australia can be clarified (Shearer, Coiacetto, Dodson, Taygfeld, 2016). In the interim, the expanded populace in the metropolitan urban areas and the improved way of life of the Australian people group have been significantly gone about as the drivers prompting ascending in the value level of land and lodging (Roseland, Cureton, Wornell, 2008). In this, the main considerations prompting the occasion have been appeared in the hidden segment as follows: Accessibility of lodging advances at a low-loan fee: The money related establishments in Australia have offered lodging advances to the social open of Australia at a reasonable financing cost. Because of the results, the more Australian open has gone to the metropolitan urban areas for better chances. Hence, the interest of the houses has added to the flooding value level (Steele Gleeson, 2011). Improved way of life and pay level: Currently, outside direct ventures have to a great extent added to the improvement of the social expectation for everyday comforts. Additionally, the pay status of the Australian has been improved significantly. Thus, the most extreme prevalence has proposed to move their business in the urban areas prompting expanding interest for houses (Gurran, Gallent, Chiu, 2016). Along these lines, the flooding interest for the house has prompted expanding in estimating. Reduced gracefully of lodging lands: Another significant factor prompting flooding lodging costs is the conservative flexibly. As the gracefully of land is to some degree steady, the providers can't give the land as per the interest. Along these lines, the interest has outperformed the gracefully of houses fuelling the value climb of houses in Australia. Based on financial matters essentials, the interest side effect and gracefully side effect have been particularly dissected in the segment to recognize how the drivers are prompting value climb of lodging in Australia. Mostly, the low-intrigue advances and improved ways of life have prompted the ascent sought after of lodging constraining the value flood to get inescapable. Figure 1: Impact of Change in Demand of House and Land Source: (Evans, 2014) As appeared in the above figure 1, because of simple credit moderateness and improved salary guidelines of the Australians, the interest bend has been moved to directly from D to D1 however the gracefully stays steady as the straight line S. Because of the move sought after has expanded the value level of lodging to P to P1. Along these lines, definitively it tends to be said that the flood popular prompting value climb of houses. Figure 2: Impact of Change in Supply of House and Land Source: (Evans, 2014) Presently, considering the flexibly situation of accessible lodging lands, gigantic interest of terrains has added to the lack of gracefully as appeared in the figure 2. The gracefully bend is moved towards left from S1 to S2 indicating the lack in flexibly. Thusly, the withdrawal in flexibly situation has fuelled the valuing of hoses from the point P1 to P2. Along these lines, the restricted gracefully of land for the lodging complex has prompted flood in estimating (Parks Hardie, 2013). 2. Australian economy has clear a flooding lodging costs that has brought about a diminishing lodging moderateness for the more youthful age. At the end of the day, the more youthful age of Australia requests all the more lodging property in a constrained flexibly showcase that bit by bit builds the cost of the land properties (Habibis, 2013). Consequently, it is significant for the Australian Government to make important strides so as to control cost of house and land to guarantee reasonable lodging for the more youthful age. There are a few macroeconomic changes that can be made by the Australian Government to control the cost of lodging properties in the market. The investigation has been created to introduce the macroeconomic changes that can be suggested by the Government of Australia so as to improve the reasonableness in the lodging business (Habibis, 2013). The examination additionally centers around clarifying the effect of the macroeconomic changes on the interest and grace fully of house in the market to know how these changes will influence the cost and lodging reasonableness among the more youthful age. The three essential macroeconomic arrangements are talked about in this beneath: Increment Credit to Acquire Property The primary macroeconomic arrangement that can be embraced by the Australian government is to build the credit offices to gain property (Lee, 2009). For instance, lessening charge on contract intrigue, decrease advance to esteem proportions and increment obligation as far as possible. The expense on contract premiums must be diminished to limit the expense of taking care of the acquired cash. Then again, a higher measure of credit can be given in examination the valuation of the house (Kroll, Mller, Haase, Fohrer, 2012). Moreover, expanding the constraint of a person to take credit can likewise build house moderateness. At the end of the day, lessening the use to get credits and offering low premium advances to the more youthful age individuals will expand the moderateness of lodging properties in the Australian market (Lee, 2009). As a matter of first importance, youthful age individuals will have a more extended residency of life and expanding the residency of advances to around 30 years will diminish the EMI installments for the youthful age individuals. Then again, expanding the obligation as far as possible will raise the measure of credit that can be taken from the market. Subsequently, bringing down the loan fee and increment in the gracefully of cash will help the buying intensity of the more youthful age in the Australian market. The Government of Australia must roll out vital improvements in the credit strategy of the banks to expand the capacity of the more youthful age to secure a property. Decrease Taxation on Capital Gains The tax assessment on capital additions goes about as an extra over the complete cost of the property. For instance, an individual buying a house or land needs to pay additional duty over the limited estimation of the property. Subsequently, it expands the weight over the youthful age individuals to buy a house or land on account of the expansion cost of procuring a property (Mills, 2007). Subsequently, the legislature of Australia must decrease the tax assessment on capital additions to lessen a definitive expense of gaining a land or house (Lawrence, 2009). Presently, utilizing the interest law, it very well may be seen that the fall in the cost will expand the amount interest for the land properties. A clarification is given in subtleties utilizing a chart in this underneath: Figure: Impact of decrease in tax collection on capital increases Source: (Yates, 2007) It tends to be seen from the above chart that the last cost or cost of getting a house lessens from P to P1. For this situation, the interest bend stays at its place at D. Henceforth, the consequence of fall in the cost is the expansion in the amount requested for the lodging properties. Henceforth, it very well may be seen that the decrease in the tax collection on capital additions will slowly expand the amount requested for lodging among the more youthful age (Yates, 2007). Be that as it may, it is critical to remember that the interest for house and land is inelastic in nature. Subsequently, the move in the amount requested is very less when contrasted with the adjustment in the cost. Along these lines, it very well may be seen that this macroeconomic approach will be compelling by a base level. Impetuses to Increase Supply Another powerful macroeconomic arrangement that can be utilized by the Australian government is to give impetuses to expand gracefully in the lodging business (Lee, 2009). For instance, permitting more units of house in a specific land, building government lodging and sponsoring open vehicle to expand the gracefully of house and land in the market. Decreasing the territory of house by building more units of houses in a little land can expand the flexibly in the lodging market (Mills, 2007). Besides, building government lodging additionally prompts increment in the gracefully. Besides, financing and creating open vehicle in edge territories will lessen the expense of building a house that will additionally diminish the cost. Consequently, these arrangements can be utilized to expand the gracefully of house that decreases the cost and results in increment in the amount requested (Lawrence, 2009). Subsequently, an expansion in the lodging reasonableness can be clear from the chart intro duced beneath: Figure: Impact of increment in Supply on Housing moderateness Source: (Umeda, 2012) The expansion in the flexibly will bring about move of the gracefully bend from introductory gracefully to new gracefully over the long haul. Henceforth, it will additionally bring about the fall of cost from P to P that will expand the amount requested from Q to Q in the market (Wulff Maher, 2008). In this way, impetuses to build gracefully can be utilized by the Australian Government to guarantee lodging reasonableness among the more youthful age. Henceforth, it tends to be seen from the above investigation that distinctive macroeconomic arrangements can be utilized by the Australian Government to guarantee moderate lodging for the more youthful age. Giving lower intrigue advances, increment credit moderateness, diminishing tax assessment on capital additions and impetuses to expand flexibly can be utilized together to see a superior reasonableness in the lodging business in Australia for the more youthful age. References Evans, A. (2014).Economics, land, and the gracefully of land. Oxford, UK: Blackwell. Gurran, N., Gallent, N., Chiu, R. (2016).Politics, Planning and Housing Supply in Australia, England and Hong Kong. London: Taylor and Francis. Habibis, D. (2013). Australian Housing Policy, Misrecognition and Indigenous Population Mobility.Housing Studies,28(5), 76

How Attitude Roles in Decision Making Essay

Before I can discuss the assume job among demeanor and purchasing choice procedure, let’s take a gander at the meaning of disposition first. Demeanor is a relationship connect among feeling and accepts or a consumer’s considerations and the reaction activity. We can say that mentality is something that is in the people’s mind and the idea of a consumer’s transparency towards the data got by every person. The data got can be both positive and negative. As we would all be able to see that mentality include consumer’s thought which affects the inclination and that feeling will communicate through the consumer’s acting. Presently let’s see what it is implies by dynamic procedure. It is a procedure of picking some path from the entirety of the choices that a shopper has considered with. Regularly, an official conclusion making would be the best and the most appropriate elective which helps purchaser arrives at their target. Disposition is the significant inside factor that shapes an individual decision. Moreover, there are three factors that will prompt consumer’s conduct, which are inclining factors, empowering factors and fortifying components. Inclining factors involve information, convictions, qualities, societies and, obviously, demeanor, which I will concentrate on. Additionally, mentality can be structure by numerous ways. It might be through the learning procedure, the capacity to recognize the distinctions (which one is positive or negative), mirror from others and experienced for every person. These three components impact a consumer’s conduct and it likewise impact the dynamic of that specific shopper. For instance, buyer has encountered that the costly things consistently meet up with the better quality items. What's more, he had confidence in what is really has transpired before, called the intellectual segment. So at whatever point he perceived the issue, similar to he need to purchase another sack (an open door acknowledgment) and attempt to look for all the choices he is happy to purchase or inspired by, you will discover that all the options are for the most part the brand name packs with the significant expense. In another circumstance, a shopper may copy a demeanor of â€Å"being fat methods ugly† from companions and society around her. So it might prompts the dynamic by she is beginning to perceive the issue by believing that she is excessively fat and will group herself as appalling individual, called an emotional part. At that point what she will attempt to do next is the data search, both interior and outer, about how she can decrease her weight, etc. So you can see that a demeanor of a shopper, despite the fact that it originates from your general public around you, can impact an individual’s dynamic procedure without any problem. The capacity of perspectives may likewise job in the dynamic procedure since it encourages devours to adapt to their surroundings. One of the five utilitarian speculations of mentalities is social-alteration work, which is a capacity happen when a general public make a change about something and it drives an individual shopper to build up the disposition toward it. For instance, these days individuals are progressively worried about the ecological in our general public

How Apps Can Be Used for Eating Disorder Recovery

How Apps Can Be Used for Eating Disorder Recovery Eating Disorders Treatment Print How Apps Can Be Used for Eating Disorder Recovery By Lauren Muhlheim, PsyD, CEDS facebook twitter linkedin Lauren Muhlheim, PsyD, is a certified eating disorders expert and clinical psychologist who provides cognitive behavioral psychotherapy. Learn about our editorial policy Lauren Muhlheim, PsyD, CEDS Medically reviewed by Medically reviewed by Steven Gans, MD on February 20, 2016 Steven Gans, MD is board-certified in psychiatry and is an active supervisor, teacher, and mentor at Massachusetts General Hospital. Learn about our Medical Review Board Steven Gans, MD Updated on August 01, 2019 Hero Images, Getty Images More in Eating Disorders Treatment Symptoms Diagnosis Awareness and Prevention New technology in the form of applications (AKA “apps”) offers potential risks and benefits for patients with eating disorders. Dangers of Fitness Trackers for Patients With Eating Disorders Although the impact of fitness trackers on clients with eating disorders has not yet been well studied, anecdotal evidence and some early research suggest these applications may be detrimental. People with eating disorders frequently obsess about the number of calories they are consuming and burning. Many health apps emphasize tracking the ingestion and expenditure of calories. In addition, they encourage the user to reduce intake, increase energy expenditure and set increasingly extreme goals, all behaviors that are consistent with eating disorders. In one study of people with eating disorders, 75% of participants reported using My Fitness Pal, a calorie-counting mobile app that allows users to track and input their daily food intake. Of these users, 73% believed the app had contributed to their eating disorder.   Eating Disorder Recovery Apps On the other hand, there are also several eating disorder recovery apps that may be helpful to people with eating disorders. Some of these applications embody or support principles of evidence-based treatments such as Cognitive Behavioral Therapy (CBT). One particularly important feature that some apps provide is self-monitoring, which is also a hallmark of CBT for many mental disorders. In the treatment of eating disorders, self-monitoring involves recording food consumed along with accompanying thoughts and feelings. App-based self-monitoring offers several advantages over paper monitoring. As most individuals keep their smartphones with them much of the time, using the apps may facilitate more real-time monitoring, providing both greater convenience and accuracy. While fitness apps and eating disorder recovery self-monitoring apps both incorporate tracking, each differs in focus. Fitness apps primarily track numbers and data, such as caloric intake. Eating disorder recovery apps, on the other hand, are concerned more with tracking the thoughts and feelings associated with eating than with the specific amounts. This distinction is significant. Below is information about two of the more popular eating disorder apps that include self-monitoring. Recovery Record A 2014 study by Jurascio and colleagues found Recovery Record to be the most comprehensive eating disorder treatment app on the market. It contains features including self-monitoring, personalized coping strategies, social connections, and a portal to connect with the user’s clinician. It also contains components of cognitive-behavioral based interventions. Users can enter food, thoughts, feelings, and urges to use compensatory behaviors. The app offers assistance with coping strategies and goal setting in addition to the ability to set reminders. Additional features include meal planning, rewards, affirmations, and the potential to connect with others. The app also allows therapists to monitor their patients use of the app. Although many patients find this feature an added benefit, some may feel its intrusive. Rise Up Recover Rise Up is another popular and well-regarded app. Rise Up has a comparable self-monitoring feature that allows for recording of daily meals and snacks, emotions, and “target behaviors” such as bingeing and purging. The app encourages the use of coping skills during times of distress. Users can share motivational quotes, images, and affirmations. They can access additional information sources such as music, podcasts, articles, and a treatment directory. The app can also export meal data to share with members of the user’s treatment team. What to Look for in an Eating Disorder Recovery App Apps come and go. Depending on when you read this, the suggestions above may no longer be state of the art or available. Finding an app with the right features is more important than any specific title. We offer the following suggestions on what to look for: Self-monitoring of food intake without calorie counting. Self-monitoring is a well-researched and important element of eating disorder treatment. Calorie-counting, however, is not recommended because it may increase obsessive thinking.Fields to log behaviors, thoughts, and feelings. Recovery involves becoming more aware of feelings and thoughts as well as changing behaviors. Thus, an app used for recovery should have fields to log this information.Motivation and/or coping strategies. Apps that incorporate ways to remind you of what you might want to try or already know (but can need a reminder at the moment) can be supportive. A Word From Verywell Remember that an app is not a substitute for treatment. It is always a good idea to discuss the use of an eating-related app with your treatment team.

Digital And Digital Immigrants By Marc Presky - 1668 Words

The article â€Å"Digital Natives, Digital Immigrants by Marc Presky, appears in the book On the Horizon. The article asserts that due to the the anacrusis of the digital age, this generation has changed dramatically, thus, it is no longer possible to reach them through obsolete teaching methods, as it comes close to teaching them in a foreign language. In order to solve this issue, Presky suggests that we need to update our methodology in order to fit today’s needs better. In the beginning of the article, Prensky implies that student have changed dramatically, thus, are no longer the correct audience for our education system. He goes on by explaining that this change is not exactly a diversification, as in clothes, slang or the†¦show more content†¦Digital Natives, Digital Immigrants. Page. 2 - 2001), as he emphasises it. To furthermore clarify this term, he names many examples such as â€Å"bringing people physically into your office to see an interesting web site† (Prensky, Mark. Digital Natives, Digital Immigrants. Page. 2 - 2001) instead of â€Å"sending them an email† (Prensky, Mark. Digital Natives, Digital Immigrants. Page. 2 - 2001). Prensky complicates this matter when he embeds it into school routine. He endorses that to digital natives it feels like they are being taught by foreigners who have no wrap their head around English language yet. However, this is a dilemma that only starts, rather than ends, at the lack of communication. By introducing another example, he disputes that there is also a quarrel in the way of thinking in general. Digital natives, for example, believe that studying should be fun and could easily be done, while, for example, watching TV. This Digital Immigrants, however, deny up to this day; simply because they were not capable of doing all those things, while they were young. He then reminds us that, in spite of prevailing belief, one cannot simply presume that students function the same way their teachers did when they were in school. As a result of this, he enters the debate whether â€Å"students should go back to their old ways or if teachers should have to learn this new language† (Prensky, Mark. Digital Natives, Digital

Advantages and Disadvantages Of The Louisiana Purchase - Free Essay Example

Sample details Pages: 3 Words: 997 Downloads: 7 Date added: 2019/10/31 Category History Essay Level High school Tags: The Louisiana Purchase Essay Did you like this example? The Louisiana Purchase constituted many advantages and disadvantages for President Thomas Jefferson and for the country. Some of the moral dilemmas included were, whether to purchase Louisiana and turning on what the constitution says. Jefferson believed in strict constructionism meaning he found ways to incorporate ideas for certain instances into the constitutions laws that werent initially written in there. So, while he is having a hard time figuring out whether he should purchase Louisiana, he is also worried about what people may think of him if he disobeys the constitution.   The Louisiana Purchase posed many advantages for the country. Jeffersons decision to buy Louisiana expanded the U.S. massively. By any measure, it was one of the most colossal land transactions in history, involving an area larger than todays France, Spain, Portugal, Italy, Germany, Holland, Switzerland and the British Isles combined (Harriss). If Jefferson would not have made the purchase, the U.S. lands would not be the same. Another advantage to the situation was the underground features. The new land flourished in gold, silver, and many other ores that people would eventually mine and use as currency (Harriss). This meant that more people would immigrate to the United States, increasing the population. With the population increasing, the U.S. needed more housing and jobs available. People began to build up cities and towns until there was more than enough room for everyone. The expansion also led to more agriculture and farming, benefitting the people (paying jobs) and the countr y (Harriss). As people worked in farming, money was made, and the country eventually acheived wealthiness. This contributed to the building of roads and new businesses. The U.S. continued to grow beneficially because of Jeffersons decision. Although there were many influencing aspects of purchasing Louisiana, there were also some downfalls. Don’t waste time! Our writers will create an original "Advantages and Disadvantages Of The Louisiana Purchase" essay for you Create order Since the purchase expanded the U.S. so greatly, they came across problems that affected how the country grew. Thomas Jefferson was a huge public figure and was viewed as a positive influence to many people, but there were some that did not agree with his ways. He was known for being the one to make sure what he wants to do is done in a constitutional manner. When people accused Jefferson as being unconstitutional because of his strict constructionism, he made sure to prove them wrong. Jefferson had always stated his strong belief that the federal governments powers should be interpreted strictly. Article IV of the Constitution said new states could be added, but made no provision for taking on foreign territories, Jefferson argued that a constitutional amendment was needed. (Jefferson and the Louisiana Purchase). Jefferson struggled to convince the government that there were no rules against buying foreign lands. He eventually decided to try to justify the situation. He wrote in 180 3, The General Government has no powers but such as the Constitution gives it. it has not given it power of holding foreign territory, and still less of incorporating it into the Union. An amendment of the Constitution seems necessary for this. (Jefferson and the Louisiana Purchase). All of this to say, Jefferson did not have a strong bond with his people, and this negatively affected the way the U.S. grew. Along with Jefferson being frowned upon for his doings, there were other disadvantages to the Louisiana Purchase. Before the purchase, France had just taken control over Louisiana. After the U.S. took over Louisiana, Jefferson found out this information and instantly felt differently about the situation. French-controlled Louisiana would become a point of eternal friction with us, he wrote in April 1802, and would force us to marry ourselves to the British fleet and nation. (Greenspan). This instance created some tension between the two countries. Another complication was that of people of the U.S. having an opinion about buying Louisiana. Fisher Ames wrote, We are to give money of which we have too little for land of which we already have too much. (Greenspan). The U.S. had already claimed a lot of land and people began to think that it was too much. Jefferson did not think much about this and still bought it.   Was Thomas Jefferson a bad president? In my opinion, no, he was not a bad president. Jefferson may have used strict constructionism during his presidency (although some did not like it), but it truly exploited the United States future decisions and doings. While Jefferson was president, he accomplished many things. While president, Jeffersons principles were tested in many ways. But Jefferson stood firm in ending the importation of slaves and maintaining his view of the separation of church and state. In the end, Jefferson completed two full and eventful terms as president. He also paved the way for James Madison and James Monroe, his political prot? ©g? ©s, to succeed him in the presidency. (Thomas Jefferson Establishing a Federal Republic). As the article says, he did not back down on his beliefs. He stayed loyal to the country and made it possible for others to become president as well. Jefferson will always be remembered for his intelligent decisions. He led his country to gr eat places and is thanked for doing so.   In the end, I think that purchasing Louisiana had its ups and downs but each one benefited the United States. For better or for worse, I believe that the U.S. would not be where it is today without the Louisiana Purchase. Though we may have had some complications, this decision impacted the country in many ways and could not have been done without Thomas Jefferson. At the beginning, he was not fully trusted but people warmed up to his strict ways and realized that he knew what he was doing. Thomas Jefferson had some moral dilemmas along the way, but they challenged him to be the best president that he could be. He stood strong on his beliefs and never backed down which allowed people of the country to count on him for loyalty.

American Online Case Study Free Essays

Q1: The major explanations to the reason why AOL was so successful in the commercial online industry comparing to its competitors CompuServe and Prodigy are as follows:  · AOL offered the unique and board range of features such as Online Community, Computing and the like, so their services are relatively differentiated  · AOL kept good relation with its customer because of the easy access to AOL’s online service which only required to have a personal computer, a telephone line, and a computer, and also reflected in AOL’s rate structure which was the easiest for consumers to understand and anticipate, relative to its competitors  · The bargaining power of AOL with supplier is achieved by making strategic partnership with American Express, and so on; and completing its acquisitions of Internet software developers, along with AOL’s growing membership base, in order to strengthen its new interactive services industry by means of pursuing a number of initiatives .  · The threat of new enchant is low, since there is not much service providers, like AOL, acted as middlemen between thousands of content providers and millions of customers, which provided lucrative profits prior to 1995. Q2: There are several crucial changes happened in the commercial online industry in the year of 1995 and after:  · With the advent of the Internet World Wide Web and the entrance of Microsoft Network, content providers had substitution distribution channels that offered greater control over their products  · Under the background that the migration of proprietary services and content to Web sites, the exclusive offerings of AOL was declining, thus it was likely reduce the market share of AOL in the industry and subsequently posed negative effect on its profitability  · Since everyone with a PC was his/her own publisher, customers would sign up for an Internet on-ramp service provided by other companies and they were tend to use the other companies’ browsing software to surf the world’s database, resulted in the situation that content providers were starting to make use of these distribution channels. We will write a custom essay sample on American Online Case Study or any similar topic only for you Order Now Q3. Based on the annual reports and footnotes, AOL’s accounting policy was to capitalize subscriber acquisition costs prior to 1995, which in my view, was not likely to be justified in that period based, for the uncertainty whether ts customers could migrate to the internet still remained since this would probably affect the growth in its subscriber and the profit of its services, although the CFO of AOL attributed the choice to the explanation that the period over which the revenue would be received was matching with the timing the expense, yet there was a rising gap between the reported income and its tax income, except for a big change in its service quality, these two numbers bear a consistent relationship to each other. Q4. The company should shorten the length of amortisation of the acquisition costs instead of extending it. The reason of this assertion are based on the life cycle of the industry which was supposed to be relatively short and because of the constantly cha nging environment of the commercial online industry with huge uncertainties, which was likely to require conservative accounting policy to reflect the financial figures so as to better match revenues with expense. Nevertheless, AOL even extended the amortization period for its subscriber acquisition cost from about 15 months to 24 months, which made it would be tend to face big risks when customers switched to other online service under uncertainty. Therefore, the company’s response seems to be inconsistent with my view. Q5. If AOL followed the policy of expensing subscriber acquisition outlays rather than capitalizing them, there would be a huge amount of subscriber acquisition costs, leading to a comparatively decreasing profit and increase operating loss in the income statement as well as lower equity in the balance sheet for the last same period or compared to its peers, which might lose the attractive looking of the accounting figures when it was eager to raise money from the public market so as to pay its bill. How to cite American Online Case Study, Free Case study samples

Bond Valuation Share JAY and KAY Returns â€Myassignmenthelp.Com

Questions: Consider shares in two companies, JAY and KAY, as follows: Expected Return E(R) Standard Deviation s Correlation Coefficient r Share JAY 12% 18% 0.3 Share KAY 24% 32% a) Calculate the covariance between Share JAY and KAY returns. b) What is the expected return and standard deviation of returns on a portfolio comprising 35% in Share JAY and 65% in Share KAY? c) If you wanted to create a portfolio consisting only of these two shares, how much would you need to invest (weights) in each share so that your portfolio return would be equal to 15.6%? Note: do not round. d) Using the weights calculated in part c); calculate the variance and standard deviation of your portfolio. Answers: (a). Covariance between Share JAY and KAY returns: - To calculate the Covariance between Share JAY and KAY returns following formula is used:- = Standard Deviation of JAY * Standard Deviation of KAY *(Correlation Coefficient) = 18 *32 *(0.3) = 172.6 Hence, Covariance between Share JAY and KAY returns is 172.6 (b). (i) Expected Return: - Expected return means that the return the investor can expect in the future. It is not the accurate return but only expected return. Expected Return = Weight of JAY *(Expected Return) + Weight of KAY * (Expected Return) Expected Return = 0.35*(12) + 0.65 * (24) Expected Return = 19.8% Hence, the Expected Return is 19.8% (ii) Standard Deviation (WA2a2 )+ (WB2B2 )+2 (A*WA*b *WB)* Correlation Coefficient (0.35*0.35*18*18)+(0.65*0.65*32*32)+2(18* 0.35*32*0.65*-0.3) 39.69+32.64 -78.624 393.706 = 19.84 (c). If a portfolio is to create consisting only of these two shares, and to make the portfolio return equal to 15.6% then the investment is to be made of :- Let assume the weight of JAY is W, then the Weight of KAY WILL BE 1-W Desired Portfolio Return = 15.6% 15.6% = W*12%+ (1-W)* 24% 0.156 = 0.12W +0.24- 0.14 W 0.156 -0.24 =-0.12W 0.084 = 0.12W 0.084 / 0.12 = W 0.7 =W Expected weight which is earned is 15.6% Then weight of JAY (W) will be 70% Weight of KAY (1-W) will be 30%. (d). (i) Basis on the above calculation revised Standard Deviation is:- New Weight Standard Deviation JAY 70% 18 KAY 30% 32 = (0.70 * 0.70 *18 *18) + (0.30 * 0.30 * 32 * 32) + 2 (0.70 *18*0.30 *32 *- 0.3) = 158.76 + 92.16 -36.288 = 214.632 = 14.65 (ii) Variance is the square of standard deviation Variance = () 2 = (14.65) 2 Variance = 214.62.