Answer:
Security D
Explanation:
Fair rate of Return =
where B = Beta, which is the degree of responsiveness of security return to market return
= Risk Free Rate of return
= Return on market portfolio
Risk premium which is, 10 - 4 = 6 %
Thus, for security A = 4 + 0.85 × 6 = 9.1%
for security B = 4 + 0.75 × 6= 8.5%
for security C = 4 + 1.2 × 6 = 11.2%
for security D = 4 + 1.35 × 6 = 12.1%
for security E = 4 + 0.5 × 6 = 7%
Expected returns as given
for A = 7%
for B = 9%
for C = 9.5%
for D = 12.1%
for E = 14%
As is evident, the fair and expected return for stock D is the same i.e 12.1%. Hence, the investor would be indifferent in that case whether to buy, sell or hold such a stock.
Answer: Department store
Explanation: When an establishment offers products and services to end or final consumers in various product segments or categories, such stores are usually referred to as department stores. The word department means each product offering is separated or segmented with varieties to choose from. In the scenario above, Nicoloss store is composed of departments ranging from Clothing, Cosmetics, travel bags, furniture, which gives shoppers the opportunity to purchase from different categories of products on offer within the walls of a single store.
Answer:
10.35 %
Explanation:
Using the Capital Asset Pricing Model (CAPM) approach, Allen’s cost of equity is
Cost of Equity = 4.67% + 0.92 x 6.17%
= 10.35 %
Answer:
a. Eduardo has recently moved to a new city with his wife who was offered a great job there. He is trying to find a position in the same industry he worked in before relocating. Voluntary Unemployment
b. Derek worked for a large telecommunications firm that went bankrupt last year due to a recent recession. He has since tried to find work with one of the firm's competitors, but good jobs are currently hard to come by.
Cyclical Unemployment.
c. Drew lost his job at a car manufacturer last year. He spent 6 months applying for every job possible before giving up 2 months ago. He now spends his day playing Xbox.
Voluntary Unemployment
d. Paula has 20 years of experience in manufacturing. Her employer, and many other manufacturing firms, recently closed their U.S. plants. She would like to find a similar job but is unable to find anything that utilizes her skills.
Structural Unemployment
e.Katherine works part-time at a small retail store. She would like to work full-time, but her employer is currently unable to extend her hours.
No Unemployment.
f. Tyrell just graduated from college with a business degree. He is currently looking for a job in banking in the major city he just moved to.
No Unemployment
g. Mike is a contractor who has been unable to find work, since most businesses are delaying or canceling their construction plans due to economic uncertainty in the coming year.
Structural Unemployment
h. Meg used to own and run her own bookstore. Her sales declined due to competition from online retailers. She has not been able to find any work related to her skills in the diminishing retail industry for books.
Structural Unemployment
Cheers!