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Sindrei [870]
1 year ago
13

The annual return on the s&p 500 index was 12.4 percent. the annual t-bill yield during the same period was 5.7 percent. wha

t was the market risk premium during that year?
Business
1 answer:
EleoNora [17]1 year ago
7 0

The annual return on the s&p 500 index was 12.4 percent. The annual t-bill yield during the same period was 5.7 percent. Then the market risk premium during that year will be 6.7 percent.

The marketplace risk premium is the distinction between the expected go back on a market portfolio and the chance-unfastened price. The marketplace threat top fee is the same as the slope of the SML, a graphical representation of the CAPM.

To calculate market risk premium use the formula

Market risk premium = ( Market rate of return ) - ( Risk-free rate of return )

Market risk premium = 12.4 - 5.7 = 6.7%

Therefore Market risk premium is 6.7 percent ( 6.7 % )

The annual return back is the go-again that funding presents over a period of time expressed as a time-weighted annual percent. Assets of returns can embody dividends, returns of capital, and capital appreciation.

Learn more about market risk premium here   brainly.com/question/24001280

#SPJ4

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baherus [9]
Rational choice theory states that individuals rely on rational calculations to achieve outcomes that are in line with their personal objectives. These decisions provide people with the greatest benefit or satisfaction — given the choices available — and are also in their highest self-interest.
3 0
3 years ago
Ayala Architects incorporated as licensed architects on April 1, 2017. During the first month of the operation of the business,
ArbitrLikvidat [17]

Answer: (1) journal Total Dr $27,282, Cr $27,282 (2) cash Account Dr: Total $21,823, Cr Balance c /d $19,613 Total $21,823, salary payable Total Dr $381, Cr $381,Account receivable Account Dr :Total $1,929 Cr Total $1,929, salary expense Account Dr Total $ 1,524 Cr: $1,524, common stock Total Dr : $18,270 Cr: Total $18,270, Supplies Account Total Dr : $1,320, Cr $1,320, Account Payable Total Dr :$1,320, Cr :Total $1,320, service revenue Total Dr : $4,771, Total Cr : $4,771, unearned revenue Total Dr :$712, Total Cr :$711, (3) Trial Balance Total Dr $24,767, Total Cr : $24,767

Explanation:

(1) The journal entry for the transaction will be

Apr 1 Dr : Cash $18,270, Cr : common stock $18,270

Apr1 Dr: salary payable$381,Cr: cash $381

Apr 2 No entry required

Apr 3 Dr : supplies $1,320, Cr : Account payable $1,320

Apr 10 Dr Account Receivable $1,929, Cr : service revenue $1,929

Apr 11 Dr cash$ 711,Cr: unearned revenue$ 711

Apr 20 Dr: Cash $2,842, Cr : service revenue $2,842

Apr 30 Dr : $ Account Payable $305 Cr : Cash $305

(2) The T Account will be

Cash Account

Dr common stock $18,270, unearned revenue $711, service revenue $2,842

Cr : salary payable $381, salary expense $1,524, Account payable $305,Bal c/d $19,613 Total Dr $21,823, Cr : $21,823

Salary payable Account

Dr : cash $381,Cr: Balance c/d $381 Total Dr $381,Cr :$381

Account Receivable Account

Dr: service revenue $1,929, Cr: Balance c/d $1,929 Total Dr $1,929, Cr $1,929

Salary expense Account

Dr: salary expense $1,524, Cr Balance c/d $1,524, Total Dr $1,524,Cr $1,524

Common Stock

Dr : Balance c /d $18,270, Cr :Cash $18,270 Total Dr $18,270, Cr $18,270

Supplies Account

Dr: Account payable $1,320, Cr Balance c /d $1,320, Total Dr $1,320, Cr $1,320

Account Payable

Dr: Cash $305,Balance c/d $1,015, Cr supplies $1,320, Total Dr $1,320, Cr $1,320

Service Revenue Account

Dr Balance c /d $4,771 Cr : Account Receivable $1,929, cash $2,842, Total Dr $4,771, Cr $4,771

Unearned Revenue Account

Balance c/d $711, Cr cash $711, Total Dr $711,Cr $711

(3) The trial balance as on 30/04/2017

Dr: Cash $19,613, salary payable $381, supplies $1,320, Account Receivable $1,929, salary expense $1,524 Total $24,767

Cr : Common Stock $18,270, Account Payable $1,015, service revenue $4,771, unearned revenue $711 Total $24,767

6 0
3 years ago
Suppose disposable income increases by $ 2,000 . As a result, consumption increases by $ 1,500 . Answer the questions based on t
timama [110]

Answer:

Increase in savings resulting directly from the given change in income

= increase in income - increase in consumption  = $2000-$150 = $500

Marginal propensity to save = increase in savings/increase in income = 500/2000 = 0.25

Explanation:

3 0
3 years ago
Ethan uses the cash method of accounting and a calendar year. ethan received a check from a client on december 26, 2016. he didn
Volgvan
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6 0
3 years ago
Zephyr Electricals is a company with no growth potential. Its last dividend payment was $4.50, and it expects no change in futur
VARVARA [1.3K]

Answer: $50

Explanation:

We can use the Gordon Growth Model of Stock Valuation. The formula is thus,

P = D1 / r – g

D1 = the annual expected dividend of the next year

r = rate of return

g = the expected dividend growth rate (assumed to be constant)

There is no growth potential and dividends are expected to stay the same so no growth rate and D1 will be the same as D0.

Plugging that into the formula therefore will give us

P = D1/r

P= 4.5/0.09

= $50

Current Stock Price is $50.

6 0
2 years ago
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