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hjlf
2 years ago
15

Vera Paper's stock has a beta of 1.40, and its required return is 12.00%. Dell Dairy's stock has a beta of 0.80. If the

Business
1 answer:
jeka57 [31]2 years ago
3 0

The required rate of return on the stock of Dell company is come out to be 8.89%.

<h3>What is a stock?</h3>

Stock represents the number of shares being owned by an investor in the company on which it gets the dividends.

Given values for step 1:

The required rate of return: 12%

Beta factor: 1.40

Risk-free rate: 4.75%

<u>Step-1</u> Computation of market risk premium:

\rm\ Market \rm\ risk \rm\ premium=\frac{\rm\ Required \rm\ rate \rm\ of \rm\ return-\rm\ Risk \rm\ free \rm\ rate}{\rm\ Beta \rm\ factor} \\\rm\ Market \rm\ risk \rm\ premium=\frac{\$12\%-4.75\%}{1.40} \\\rm\ Market \rm\ risk \rm\ premium=5.18\%

Given values for step 2:

Market risk premium: 5.18%

Beta factor: 0.80

Risk-free rate: 4.75%

<u>Step-2</u> Computation of required rate of return:

\rm\ Required  \rm\ rate  \rm\ of  \rm\ return = \rm\ Risk  \rm\ free  \rm\ rate + ( \rm\ Market \rm\ risk \rm\ premium \times\ Beta factor) \\ \rm\ Required  \rm\ rate  \rm\ of  \rm\ return=4.75\% + ( 5.18\% \times\ 0.80)\\ \rm\ Required  \rm\ rate  \rm\ of  \rm\ return=8.89\%

Therefore, the return of 8.89% comes out to be the required rate of return for the stock of Dell Company.

Learn more about the required rate of return in the related link:

brainly.com/question/14667431

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Gaining a reputation enables you to speak more persuasively and with greater ease. Work results and financial success are significantly impacted by the degree of trust in working relationships.

<h3>Why is it important to gain credibility?</h3>

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your well-deserved reputation as a reliable person who does their work well cares about the people they work with and for, upholds high moral standards and values both personally and professionally, and keeps their word. The extent to which others trust or believe in you is referred to as credibility.

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7 0
1 year ago
Historically, a factory has been able to produce a very specialized nano-technology component with 35% reliability, i.e., 35% of
pochemuha

Answer:

Yes

Explanation:

From the given output

The  Probability of getting 13 or more passed

when the  reliability = 0.35. can be calculated as follows

=0.0258+0.0109+0.0039+.0012+0.0004 = 0.0422   ≈  4.2%

Since the probability is less than the  5% level we will therefore reject the Null hypothesis  

answer : YES

5 0
3 years ago
Explain briefly what kind of Consumer Service is particularly open to an entrepreneur.
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Answer:

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Explanation:

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PED = -1.9% / 10% = -0.19, very inelastic

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2 years ago
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Answer:

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Explanation:

facts

3 0
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