1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Levart [38]
1 year ago
13

The market price of a security is $50. Its expected rate of return is 14%. The risk-free rate is 6%, and the market risk premium

is 8.5%. What will be the market price of the security if its correlation coefficient with the market portfolio doubles (and all other variables remain unchanged)
Business
1 answer:
MatroZZZ [7]1 year ago
7 0

The market price of a security is $50. Its expected rate of return is 14%, and the market price of the security  is mathematically given as

MR=27.368

<h3>What will be the market price of the security if its correlation coefficient with the market portfolio doubles?</h3>

Generally, the equation for expected rate return is mathematically given as

RR=(Rf+beta*(Rm-Rf)

Therefore

RR=(Rf+beta*(Rm-Rf)

Beta= (13-7)/8

Beta=0.75

In conclusion, the market price of a security

MR=DPs/RR

Where

Po=DPS/RR'

DPS=40*0.13

DPS=$5.23

and

RR=&+1.5*8

RR=19%

Hence

MR=$5.23/0.19

MR=27.368

Read more about market price

brainly.com/question/17205622

#SPJ1

You might be interested in
In an automobile company, the vice president of research and development wants to plan and coordinate the launch of a new car wi
nikdorinn [45]

Answer

Hi,

This type of communication could be interpersonal communication or formal communication

Explanation

Interpersonal communication occurs in company when it is done between two or more individuals at a workplace. For this case, the communication was between the vice president of research and development and the vice president of marketing. This could also be a formal communication where a hierarchy at the workplace is followed because the two vice presidents from different departments first talked before involving junior staff members. In this case, the two vice presidents are communicating formally with each other to get work done.

Welcome!

4 0
3 years ago
You deposit $100 on a bank 10% interest rate account for one year. How much do you get in one year time?
katen-ka-za [31]

Answer:

$10

Explanation:

10% of 100 is 10. 100÷10=10

8 0
2 years ago
If a foreign broker-dealer that does not have U.S. based operations wishes to solicit customers in the United States, the broker
Molodets [167]

Answer: I. must establish an SEC-registered U.S. subsidiary.

III. can effect its business through another registered U.S. broker-dealer.

Explanation:

If a foreign broker-dealer that does not have U.S. based operations wishes to solicit customers in the United States, the broker-dealer must establish an SEC-registered U.S. subsidiary and can also effect its business through another registered U.S. broker-dealer.

3 0
3 years ago
Cala Manufacturing purchases land for $390,000 as part of its plans to build a new plant. The company pays $33,500 to tear down
Svetlanka [38]

Answer:

Explanation:

The journal entry is shown below:

Land A/c Dr $470,500

Land Improvement A/c Dr $87,800

Building A/c Dr $1,452,200

 To Cash A/c                               $2,010,500

(Being these costs are recorded)

The computation of the land is shown below:

= Purchase cost of new plant + tear down cost + fill and level the lot cost

= $390,000 + $33,500 + $47,000

= $470,500

7 0
2 years ago
A company has been receiving complaints about the attitude of some sales clerks. Over a 10-day period, the total number of compl
Julli [10]

Answer:

the correct answer is 10

6 0
3 years ago
Other questions:
  • ________ and their members provide value because they buy and sell securities on behalf of the companies and individuals they re
    12·1 answer
  • A landowner validly conveyed a small office building to the green party "as long as they use it for operating quarters until the
    6·2 answers
  • Disney World in Orlando, FL has several theme parks, resorts, restaurants, and stores. Each is intentionally created to offer a
    8·1 answer
  • What effect will each of the following have on the demand for small automobiles such as the Mini-Cooper and Fiat 500?A. Small au
    5·1 answer
  • When gathering marketing intelligence, companies often use the U.S. census, which provides an in-depth look at the population sw
    5·1 answer
  • ______ is a structured program in which a high-potential trainee is groomed for a management position through a carefully design
    6·1 answer
  • Units Produced 20,000
    11·1 answer
  • As a store manager, Leah has to play the role of negotiator, such as purchasing products at a fair price for her company. As she
    12·1 answer
  • Career selection should be based on salary alone. Please select the best answer from the choices provided T F
    10·2 answers
  • The economy is in equilibrium when Real GDP is . At this point, the economy is also in . Which of the following did Keynes argue
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!