Answer:
The stock's new expected rate of return is 14%
Explanation:
Ke=Rf+beta(Mrp-Rf)
Ke is the cost of capital is 10.20%
Rf i the risk free rate which is unknown
beta is 1.00
(Mrp-Rf) is the market risk premium at 6%
10.20%=Rf+1.0(6%)
10.20%=Rf+6.0%
Rf=10.20-6.00%
Rf=4.20%
Beta for the risky asset is 1.00*130%=1.3
New risk rate is the old rate plus inflation rate of 2.00%
new risk free=4.2%+2%=6.2%
The expected return on the new asset is computed thus:
Ke=6.2%+1.3(6%)
Ke=6.2%+7.8%
Ke=14%
<u>Answer:</u>
On the off chance that you <em>kick the bucket</em> during the term, a passing advantage is paid out. On the off chance that you don't pass on during the term, the approach ends toward the finish of the term.
A noteworthy advantage of this sort of approach is that the excellent cash come back to you is <em>totally tax-exempt,</em> as it isn't viewed as salary yet just a discount of premiums.
As you're looking into term <em>life coverage approach choices,</em> you may go over the expression yearly sustainable premium.
Be that as it may, for an every year <em>sustainable premium term approach</em>, the top notch will build every year. After some time it's conceivable to pay more in premiums than what might have been paid for a <em>level premium term approach.</em>
Answer:
it should call back the bonds as it will save $8.25
Explanation:
Bond Price can be calculated using PV function. After 3 years,
N = 2, PMT = 5% x 1000 = 50, FV = 1000, I/Y = 2%
=> Compute PV = $1,058.25
Without the call option, the bond would be worth $1,058.25. But the firm can buy those bonds at $1,050.
Hence, it should call back the bonds as it will save $8.25
Answer:
Demand and supply
Explanation:
Demand and supply are the two factors which effect the equilibrium of price. If demand increases and the supplies remains constant the price will increase. On the other hand when demand decrease and the supplies remains constant the price will fall. So these two factors effect the Equilibrium price of a good.