You are considering investing in one of two well-diversified portfolios. portfolio a has an expected return of 8% and a beta of 1.35 while portfolio b has an expected return of 6% and a beta of 0.80. assuming that you are a rational risk-averse investor and the risk-free rate is 2%, which of the two portfolios should you choose and why? a. portfolio a because it has a higher risk premium. b. portfolio b because it has less market risk. c. portfolio b because it has a higher reward-to-risk ratio. d. portfolio a because it offers a greater reward per unit of risk.

3. describe the purpose of the sec. (1-4 sentences. 2.0 points)

The following pertains to smoke, inc.’s investment in debt securities: on december 31, year 3, smoke reclassified a security acquired during the year for $70,000. it had a $50,000 fair value when it was reclassified from trading to available-for-sale. an available-for-sale security costing $75,000, written down to $30,000 in year 2 because of an other-than-temporary impairment of fair value, had a $60,000 fair value on december 31, year 3. what is the net effect of the above items on smoke’s net income for the year ended december 31, year 3?

Alpine west, inc., operates a downhill ski area near lake tahoe, california. an all-day, adult ticket can be purchased for $55. adult customers also can purchase a season pass that entitles the pass holder to ski any day during the season, which typically runs from december 1 through april 30. the season pass is nontransferable, and the $450 price is nonrefundable. alpine expects its season pass holders to use their passes equally throughout the season. the company’s fiscal year ends on december 31. on november 6, 2009, jake lawson purchased a season ticket. required: 1. when should alpine west recognize revenue from the sale of its season passes? 2. prepare the appropriate journal entries that alpine would record on november 6 and december 31. 3. what will be included in the 2009 income statement and 2009 balance sheet related to the sale of the season pass to jake lawson?