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2 years ago

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:

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Explanation:

The computation of unionized is shown below:-

Marginal revenue product of labor = Marginal product × Price per unit

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0 0

1 200 200 $1,600

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From the above table MRPL = $200 = wage rate when there are 5 workers

and MRPL = $1,200 = wage rate when there are 2 workers.

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3 years ago

ABC, a chain of candy stores, purchases its candy in bulk from its suppliers. For a recent shipment, the company paid $1,500 and

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Answer: Option (d) is correct.

Explanation:

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sale value = pieces sold × Selling price

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sale value = pieces sold × Selling price

= 5,500 × $0.36 each

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Group 3 = 500 pieces

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sale value = pieces sold × Selling price

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= $360

Total sale value = $375 + $1,980 + $360

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$Percentage\ of\ sale\ in\ Group\ 2=\frac{Sale\ value}{Total\ sale\ value}\times 100$

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3 years ago

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2 years ago

The meaning of saving and investment Classify each of the following based on the macroeconomic definitions of saving and investm

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Answer:

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3 years ago

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Answer:

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w1 = the proportion of the portfolio invested in Asset 1

w2 = the proportion of the portfolio invested in Asset 2

σ1 = Asset 1 standard deviation of return

σ2 = Asset 2 standard deviation of return

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