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Kaylis [27]
1 year ago
5

American Paper Company has a beta of 1.2. The risk-free rate is 6 percent and the required return on the market is 14 percent. T

he required rate of return on the security is
Business
1 answer:
Lynna [10]1 year ago
3 0

American Paper Company has a beta of 1.2. The risk-free rate is 6 percent and the required return on the market is 14 percent. The required rate of return on the security is:

  • -15.6%
  • -13.2%
  • -22.0%
  • -22.8%

<h3>What Is the Security Market Line?</h3>

The security market line (SML) is a line drawn on a chart that serves as a graphical representation of the capital asset pricing model (CAPM)—which shows different levels of systematic, or market risk, of various marketable securities, plotted against the expected return of the entire market at any given time.

Its Also known as the "characteristic line," the SML is a visualization of the CAPM, where the x-axis of the chart represents risk (in terms of beta), and the y-axis of the chart represents expected return. The market risk premium of a given security is determined by where it is plotted on the chart relative to the SML

The formula for plotting the SML is:

Required return = risk-free rate of return + beta (market return - risk-free rate of return)

Learn more about SML on:

brainly.com/question/15877803

#SPJ4

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Explanation:

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4 0
3 years ago
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vichka [17]
Lacking details maybe, but since it's A or C, I'd go for C. 15 years
6 0
2 years ago
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In the long run, an increase in the money supply will affect the price level and real GDP of an economy in which of the followin
Mars2501 [29]

Answer:

1. Lower the interest rates in the economy.

2. Increase asset prices

Explanation:

Remember, increase in money supply looks at the total money made available in circulation in an economy. Alternatively it is called liquidation.

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Therefore lower interest rates as a result of increase in money supply would results in more consumption and borrowing.

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4 0
2 years ago
Joint stock companies were organizations meant to establish colonies in the americas by people from
Alex17521 [72]

Answer:

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Explanation:

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7 0
3 years ago
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Wanda owns a lemonade stand. she produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. her costs per
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Therefore, Wanda's economic profit is $96.
7 0
3 years ago
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