Answer:
The market price of the security is $31.81
Explanation:
In order to calculate the market price of the security if its correlation coefficient with the market portfolio doubles we would have to calculate first the following:
First, calculate the dividend expected after one year with the following formula:
D=P*E(ri)
D=$50*0.14
D=$7
Next, we would have to calculate the beta of the security using the CAAPM Equation:
βi= E(ri)-rf/E(rm)-rf
=0.14-0.06/0.085
=0.9412
Next, we have to calculate the new beta due to the change in the correlation coefficient with the following formula:
β=correlation coefficient/σm*σs
=2*0.941
=1.882
Next, Calculate the new expected return as follows:
E(ri)=rf+βi(E(rm)-rf)
=0.06+(1.882)(0.085)
=0.22
Finally we calculate the new piece of the security as follows:
P=D/E(ri)
=$7/0.22
=$31.81
The market price of the security is $31.81
Pluralistic ignorance effect is a practice in which no ones believes but everyone thinks they believes. This is very particular to a business administration environment. I'll give you an example,
You are the kind of person that wants cleanliness and you notice that your friend is so messy, supposed to be you will tell her about her messiness but you noticed that no one cares about her, thus you stopped yourself from speaking,
<span>A result of the intensity and magnitude of the hurricane it damaged the pipeline. Gasoline distributors affected the prices because of the loss of supply and the unstable transportation or delivery. Stability of prices or equilibrium was achieved after reconstruction and changes that had transpired. Expected prices hikes on products would also be seen afterward.
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Answer:
The correct answer is letter "C": Financing activities.
Explanation:
Financing activities refer to all funds a company obtains from outside resources of the firm to keep the business up and running or to invest in new ventures that could represent profit opportunities. By doing this, the firm acquires creditors affecting its long-run liability and equity.
