We Do Bankruptcies is a law firm that specializes in providing advice to firms in financial distress. It prospers in recessions wh other firms are struggling. Consequently, its beta is negative, -0.4.

a. If the interest rate on Treasury bills is 6% and the expected return on the market portfolio is 16%, what is the expected retur on the shares of the law firm according to the CAPM?
b. Suppose you invested 60% of your wealth in the market portfolio and the remainder of your wealth in the shares in the law firm. What would be the beta of your portfolio?

Analyzing and computing accrued warranty liability and expense waymire company sells a motor that carries a 60-day unconditional warranty against product failure. from prior years' experience, waymire estimates that 2% of units sold each period will require repair at an average cost of $100 per unit. during the current period, waymire sold 69,000 units and repaired 1,000 units. (a) how much warranty expense must waymire report in its current period income statement? (b) what warranty liability related to current period sales will waymire report on its current period-end balance sheet? (hint: remember that some units were repaired in the current period.) (c) what analysis issues must we consider with respect to reported warranty liabilities?