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kramer
2 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:
eduard2 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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Answer:furniture manufacturer: wood→sanding→chair---C

Explanation:

Operations management is the part of a production system that  administers best business practices to create the highest net operating profit within an organization. It  involves the management of  converting raw materials and labor into finished goods and services by passing through  efficient processes  so as to  maximize profit of an organization.

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2 years ago
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The correct answer is: "I would recommend her not to increase the price, because with an elastic demand function this will cause a great decrease in the quantity demanded by consumers".

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In turn, the elasticity of the demand function measures the sensitiveness of the quantity demanded by consumers when there is a certain price change. If the demand function is elastic it means that a price variation would generate an even larger variation (in the inverse direction of course!) in the quantity demanded. <u>This is the case of the lemonade stand therefore the girl should not increase prices because this will not help her to reach her objective quicke</u>r, as she would loss a greater proportion of units sold than the size of the price increase that would have allowed her to earn more per unit.

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2 years ago
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4vir4ik [10]
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ehidna [41]

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