Answer:
Ke = Rf + β(Rm – Rf)
Ke = 4.5 + 1.20(12-4.5)
Ke = 4.5 + 9
Ke = 13.5%
Explanation:
Cost of equity is equal to risk-free rate plus market risk premium. Market risk premium is beta multiplied by risk premium. Risk premium is market return minus risk-free rate.
Answer:
$12,600
Explanation:
Particulars Amount
a. Issue common stock for cash $40,000
b. Purchase building and land with cash, -$25,000
c. Provide services to customers on account $6,000
d. Pay utilities on building -$500
e. Collect $4,000 on account from customers $4,000
f. Pay employee salaries -$8,000
g. Pay dividends to stockholders -<u>$3,900</u>
Net Cash Flow <u>$12,600</u>
Answer:
3. portfolio analysis
Explanation:
Some example is portfolio analysis are:
Unilever has a portfolio of supplying tea and ice cream.
Gillette provides shaving products and batteries.
Protfolio analysis is the process by which the portfolio or products of a business are reviewed. It is done to analyse risk and returns. When portfolio analysis is done frequently it helps the business make changes in portfolio allocation based on changing market needs.
Answer:
2.58%
Explanation:
Mathematically, the relationship between the different interest rates using the equation is shown below:
(1+S2)^2=(1+S1)^1*(1+2y1y)
The spot rate in year 2 is the same as the spot rate in year 1 multiplied by the 1-year forward rate beginning in year 2.
S2=2-year rate =2.34%
S1=1-year rate =2.10%
2y1y=one-year interest rate 2 years from now=the unknown
(1+2.34%)^2=(1+2.10%)^1*(1+2y1y)
(1+2y1y)=(1+2.34%)^2/(1+2.10%)^1
2y1y)=(((1+2.34%)^2/(1+2.10%)^1)-1
2y1y=1.025805642-1
2y1y= 2.58%
The formula shows that borrowing or lending for 2 years at 2.34% is the same as borrowing or lending at 2.10% in year and 2.58% forward rate in year 2
