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kramer
3 years ago
7

Assume a firm has a beta of 1.2. All else held constant, the cost of equity for this firm will increase if the: beta decreases.

market risk premium decreases. risk-free rate decreases. either the risk-free rate or the market rate of return decreases. market rate of return decreases.
Business
1 answer:
eduard3 years ago
4 0

Answer:

Risk-free rate decreases

Explanation:

The CAPM formula for calculating cost of equity requires one to know the value of 3 pieces of information only:

1. the market rate of return,

2. the beta value

3. the risk-free rate.

Ra = Rrf + [Ba∗(Rm−Rrf)]

where:

Ra=Cost of Equity

Rrf = Risk-Free Rate

Ba = Beta

Rm=Market Rate of Return

​From the formula

Ra = Rrf + [1.2∗(Rm−Rrf)]

Ra = Rrf + 1.2Rm - 1.2Rrf

From Ra = 1.2Rm -0.2Rrf

From the expression above, it can be seen that the lower the value of Rrf (Risk-Free rate), the higher the value of Ra.

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ABC Company issues a 3-year bond with a $1,000 Face Value and a 5% Coupon Rate, with coupons paid once a year at the end of ever
AlekseyPX

Answer:

yield to maturity = 9.78%

Explanation:

yield to maturity = {coupon + [(face value - market value) / n]} / [(face value + market value) / n]]

YTM =  {$50 + [($1,000 - $913) / 2]} / [(($1,000 + $913) / 2]] = $93.50 / $956.50 = 0.09775 = 9.78%

The yield to maturity represents the total rate of return that an investor should receive if he/she holds a bond until it matures.

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3 years ago
A trader wants to gain a profit by expecting a significant move in either direction of the underlying stock. Which strategy best
alexira [117]

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Thus, the trader will profit by using options A and C.

Learn more: brainly.com/question/24767538

3 0
3 years ago
What is the name of the process that weighs the alternatives, gathers all necessary information, and can ultimately lead you to
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3 years ago
You are currently earning 12% (APR) compounded semiannually. Your investment company is switching all accounts to daily compound
Sav [38]

Answer:

The rate that will give the same effective annual rate of return is 0.033%.

Explanation:

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Semi-annual compound rate = 6% (12/2)

Assumed calendar days in a year = 360 days

Effective daily rate of return = 12%/360 = 0.033%

b) The conversion of semi-annual compounding to daily compounding results in reduced rate of return.  In this case, we assume that there are 360 days in a year.  Since the APR = 12%, it means that the daily rate of return will be 12%/360, which is 0.033%.

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Scope of collective bargaining
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The goal of unionisation is to reach an agreement on pay or other terms and circumstances of the employment contract between the employer and a team of people, or perhaps the entire workforce.

<h3>What serves as a means for provision?</h3>

A provision is cash saved in the funds to cover any liabilities that may arise in the future. To improve the accuracy of something like the current year's balance, a provision is utilized to allow for costs that could, in some cases, be offset with in current or prior financial year.

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A "business make better term" lease clause stipulates that the tenant must return the doors to the home in the same condition that they found it.

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8 0
11 months ago
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