Answer:
The correct answer is
d. lower interest rates and greater investment.
good luck
Answer: Total deduction= $2,528
Explanation:
25000*0.2*0.8=4,000
Auto maximum = $3,160
Total deduction = 3,160*0.8
Total deduction= $2,528
The answer would be the stock price will decrease. The reason behind this is the original price replicates an expectation or looking forward of a 25% upsurge in the company’s earnings. The actual increase is a dissatisfaction compared to original expectations.
Answer:
Cost of equity = 11.7%
Explanation:
<em>The capital asset pricing model is a risk-based model. Here, the return on equity is dependent on the level of reaction of the the equity to changes in the return on a market portfolio. These changes are captured as systematic risk. The magnitude by which a stock is affected by systematic risk is measured by beta.</em>
Under CAPM, Ke= Rf + β(Rm-Rf)
Rf-risk-free rate,-4%, β= Beta-1.10, (Rm-Rf) = 7% ,Ke = cost of equity
Using this model,
Ke=4% + 1.10×7%
= 11.7 %
Cost of equity = 11.7%
