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schepotkina [342]
3 years ago
12

Stock r has a beta of 1.5, stock s has a beta of 0.75, the expected rate of return on an average stock is 13%, and the risk-free

rate is 7%. by how much does the required return on the riskier stock exceed that on the less risky stock? answer
Business
1 answer:
masha68 [24]3 years ago
6 0

Answer:

4.5%

Explanation:

The formula to compute the expected rate of return under the CAPM model is shown below:

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)      

For stock r, the required rate of return is

= 7% + 1.5× (13% - 7%)

= 7% + 1.5 × 6%

= 16%

For stock s, the required rate of return is

= 7% + 0.75× (13% - 7%)

= 7% + 0.75 × 6%

= 11.5%

So, the difference of required rate of return is

= 16% - 11.5%

= 4.5%

The Stock R has high riskier stock whereas the stock S has less riskier stock due to beta

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Anika [276]

Some of the fundamentals of leadership are character, empathy, and integrity. These are essential ingredients of that make a leader successful. From the list below the best perspective would be: "The best style of leadership depends on the situation."

<h3>What is leadership and why is it important?</h3>

Simply said, leadership involves taking chances and questioning the existing quo. Leaders inspire followers to take on new and improved goals.

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4 0
1 year ago
When a company acquires a 20% - 50% interest in another company, this generally results in Group of answer choices a controlling
Softa [21]

Answer:

A significant level of influence.

Explanation:

Whenever the shares of nay company are being purchased by more than 50%, that gives the purchaser the controlling level of influence on that particular company.

Here in this question the level is between 20% - 50%, which is high and can be termed as significant but not any other term that is present in the options to the question.

Hope this helps you out buddy.

Good luck and Thank You.

6 0
3 years ago
A Kubota tractor acquired on January 8 at a cost of $315,000 has an estimated useful life of 10 years. Assuming that it will hav
grandymaker [24]

Answer:

A. Year 2 $31,500

Year 2 $31,500

B. Year 1 = 63,000

Book Value of Tractor $252,000

Year 2 $ 50,400

Book Value of Tractor $201,600

Explanation:

a. Calculation to Determine the depreciation for each of the first two years by the straight-line method

Year 1 = $315,000 / 10

Year 1 = $31,500

Year 2 = $315,000 / 10

Year 2= $31,500

B) Calculation to determine the depreciation for each of the first two years by the double-declining-balance method

Based on the information given we are first going to calculate the percentage of depreciation using straight line method and then double it

Percentage = $ 315,000 *10%

Percentage=$31,500

Now let depreciation the book value each year by 20% Using the double-declining-balance method method

Year 1=20% of $ 315,000

Year 1= 63,000

Book Value=$315,000 - $63,000

Book Value= $ 252,000

Year 2= 20% of 252,000

Year 2 = $ 50,400

Book Value=$ 252,000 -$50,400

Book Value= $201,600

8 0
2 years ago
If a manager believes there are too many pay levels and would like to reduce the number of pay levels from 30 to 20 by combining
Leno4ka [110]

Answer: Broadbanding

Explanation:

Broadbanding is a strategy employed in Human Resources when it is believed that there are too many pay levels. Broadbanding will change this as it involves the banding together of various smaller levels into Broad level so that the pay levels are less in number but wider in range.

Broadbanding gives a business the opportunity to become flatter in hierarchy thereby allowing for pay increases without having to promote a person as they will still be in the same band but get more salary.

5 0
3 years ago
A tax form asks people to identify their annual income, number of dependents, and social security number. For each of these thre
svlad2 [7]

Answer:

The three would be used in Tax Computation

Explanation: continuous

5 0
3 years ago
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