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1 year ago

What would be the expected rate of return for each company, according to the capital asset pricing model (capm)?

Business

1 answer:

VladimirAG [237]1 year ago

4 0

Formula for calculating the expected rate of return according to capital asset pricing model is as follows:

Expected return of the investment = the risk free rate + the beta or we can say it as the risk of the investment * the expected rate of return on the market – the risk free rate , the difference between the two i.e expected rate of return and the risk free rate is known as the market risk premium.

For every additional increment of risk incurred, the expected return should increase propotionately.

If any security is found to give a higher return in relation to the additional risk incurred, then the CAPM model shows that it is a buying opportunity.

Despite shortcomings of the CAPM model , this model is very popular for valuing securities.

To know more about CAPM model here:

brainly.com/question/28208903

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Dybala Corporation's produces and sells a single product. Data concerning that product appear below The company is currently sel

CaHeK987 [17]

Answer: Increase of $8,200

Explanation:

Currently, the company is making a net operating income of;

= Contribution Margin - Fixed expenses

= (90 * 6,700) - 547,700

= $55,300

If the company advertises, net operating income becomes;

= Contribution margin with increase in sales - Fixed expenses including advertisements

= (90 * (6,700 + 170)) - (547,700 + 7,100)

= $63,500

Increase in operating income = 63,500 - 55,300

= $8,200

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3 years ago

Rachel recently started a new gift shop in town. When she is deciding how to price the new products in her shop, she measures th

valkas [14]

Answer:

The correct word for the blank space is: competitive.

Explanation:

Pricing strategies are methods companies use at the moment of setting the prices of their products. The most common pricing strategies are:

Cost-plus pricing. Involves recognizing the production costs and adding a percentage of those costs which represents the profit of the firm.
Competitive pricing. Implies establishing the price of a product similar to what competitors in the market have set.
Value-based pricing. It requires setting the price of goods and services based on what consumers think the price should be.
Price skimming. Involves pricing a product high at first and changing the price according to market fluctuations.
Penetration pricing. Implies setting the price of a product low to wipe out competitors and raising it after they completely disappeared.

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3 years ago

Last year a city received notice of a $150,000 grant from the state to purchase vehicles to transport physically challenged indi

Slav-nsk [51]

Answer:

The answer is: $0

Explanation:

Government entities have to record grant revenue during the period that they occur. The city received notice of this grant last year, so they recorded the grant revenue in last year's financial statements. If they recognize any grant revenue this year, it must come from a new grant.

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3 years ago

A company uses activity-based costing to determine the costs of its three products: a, b, and

Keith_Richards [23]

Answer:

$3.10 ; $2.10 and $14.20

Explanation:

The computation of the activity rates is shown below:

For Activity 1

= Budgeted cost ÷ Total budgeted activity of cost driver

= $94,550 ÷ (18,200 + 8,100 + 4,200)

= $94,550 ÷ 30,500

= $3.10

For Activity 2

= Budgeted cost ÷ Total budgeted activity of cost driver

= $53,550 ÷ (7,100 + 13,200 + 5,200)

= $53,550 ÷ 25,500

= $2.10

For Activity 3

= Budgeted cost ÷ Total budgeted activity of cost driver

= $59,995 ÷ (1,175 + 1,000 + 2,050)

= $59,995 ÷ 4,225

= $14.20

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3 years ago

Products or services that may be sought as alternative solutions-such as purchasing tax planning software rather than paying a C

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Answer:

The answer is substitute products.

Explanation:

Substitute products are defined as two or more products that can be used for the same function for the same consumer. We can say that the tax planning software is a form of substitute product since it provides the same function that a certified public accountant also does. Buyers product refer to good made by manufacturers that are sourced by buyers to be sold by a distribution company. Competitive alternatives have no specific meaning exclusive to the term; the same applies to rivalry products.

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3 years ago