Answer:
C. 7.81%
Explanation:
Stock A and Stock B expected Return shall be calculated using the following formula:
Stock A/B expected [email protected]*Return at [email protected]*Return at [email protected]*Return at Recession.
Stock A return=0.21*18.9%+0.74*15.8%+0.05*-24.6%
=14.43%
Stock B return=0.21*9.7%+0.74*7.6%+0.05*4.2%
=7.87%
Market risk premium=(Stock A Return- Stock B return)/0.84
Market risk premium=(14.43%-7.87%)/0.84=7.81%
So Based on the above explanation, the answer shall be C. 7.81%
Answer:
1. quickly describe large amounts of data
2. the stock is worth 15% more at the end of the year than at the beginning
3. 9.2%
Explanation:
Descriptive statistics helps to quickly describe large amounts of data because it simply involves using certain measurement tools to describe the data seen such that patterns emerge that will help in analyzing the data. Examples include, frequency tables and measures of variation like range and standard deviation.
When a stock has a 15% return, it means that the owner is getting 15% more than the amount that the stock cost them therefore showing that the stock is worth 15% more at the end of the year than at the beginning.
The return on the stock is;
= (4.75 - 4.35) / 4.35
= 9.2%
Answer:
subtracting the risk-free rate of return from the market rate of return
Explanation:
Market risk premium is the premium over the risk free rate that investors demand for holding a risky asset
Market risk premium = market rate of return - risk free rate
the higher the risk premium, the higher the return investors are demanding and the riskier the investment
for example if risk free rate is 5% , market rate of return in industry A is 10% while in industry B it is 20%
Market premium in A = 10% - 5% = 5%
Market premium in b = 20% - 5% = 15%
Answer:
Explanation:
FASB amended the rules to improve the comparability of the information about business combinations provided in financial reports. A variable interest entity is a legal business.
The Financial Accounting Standards Board issued SFAS 141(R) in 2007 December, to substitute the SFAS 141. Evaluating the comment letters, articles and industry publications, they analyzed issues that were with SFAS 141 from the perspective of professionals, users and the FASB; it was evaluated 141(R) to ascertain these weaknesses and they were corrected with solutions been profound in 141(R).
Because the internet make it so much easier for consumers to do research before making decision.
Through the internet, the consumers could know the credibility of a certain product by reading past experiences of other consumers that have used it before. Not only that, the consumers might know the side effects of the product which might be intentionally hidden by the producer.
