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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

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Based on the concept of expected value, the units that the company should order to meet February demand is <u>57 units.</u>

<h3>What is expected value?</h3>

In mathematics under the probability distribution theory, the expected value is the weighted average of possible values of some random variables.  The weights are based on the theoretical probabilities of the variables.

<h3>Data and Calculations:</h3>

Cost per unit = $20

Selling price per unit = $50

<h3>Projected Demand</h3>

  Demand Units    Probability      Expected Demand Units

1.    50 units             40%                 20 units (50 x 40%)

2.   60 units             50%                 30 units (60 x 50%)

3.   70 units              10%                    7 units (70 x 10%)

Total expected demand units =    57 units

Thus, the expected demand in February is <u>57 units</u>.

Learn more about calculating expected values at brainly.com/question/10675141

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Alex, an American, was invited to a formal dinner by his French manager. He was not sure about the correct flatware to be used f
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Modeling someone's behavior means to observe their behavior and trying to imitate them.

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How does supply and demand affect prices?
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The higher the supply the lower the price will be and the higher the demand the higher the price will be. This means that they have an inverse relationship. In short, the more you need something the more you're willing to pay for it, and the less you need it the less you want to pay, and this is basically how the economy works when producing and selling.
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Zephyr Electricals is a company with no growth potential. Its last dividend payment was $4.50, and it expects no change in futur
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Answer: $50

Explanation:

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