Calculate the return on Asset A as the weighted average of the returns on the other financial instruments? 4 marks. What is the weight attached to Asset B? 2 marks.
b.
8 marks
Asset Return
Liabilities & Equity Return
Asset A $10,000 15%
Liability $1,000 8%
Asset B 2,000 6%
Liability D (2,500) ?
Equity B 13,500 13%
Calculate the return on Liability D as the weighted average of the returns on the other financial instruments? 4 marks. What is the weight attached to Asset A? 2 marks. Is Liability D really a liability? Explain. 2 marks.
Answer & Explanation
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