Which of the following situations is most likely to happen during a period of economic expansion:

Stock Y has a beta of 1.6 and an expected return of 16.6 percent. Stock Z has a beta of 0.8 and an expected return of 9.4 percen

USPshnik [31]

Answer:

Stock Y is undervalued and Stock Z is overvalued

Explanation:

The Required return on Stock Y = Risk free Rate + BetaY * Market Premium = 5.1% + 1.6%* 6.6% = 15.66%

Expected Return on Y = 16.6%

Here, the Expected return > Required return, the stock is undervalued

Reward to risk Ratio = (Expected return - Risk free rate) / Beta. For Y, Reward to risk = (0.166 - 0.051)/1.6 = 0.115/1.6 = 0.0719 = 7.19%

Required return on Stock Z = Risk free Rate + BetaZ * Market Premium = 5.1 + 0.8 * 6.6 = 10.38%

Expected Return on Z = 9.4%

Here, the Expected return < Required return, the stock is overvalued.

Reward to risk Ratio = (Expected return - Risk free rate) / Beta. For Z, Reward to risk = (0.094 - 0.051)/0.8 = 0.043/0.8= 0.0538 = 5.38%

<em>SML Reward to Risk = 0.066 = 6.6%</em>

Reward to Risk for Y > than SML Reward to Risk, then stock Y is undervalued.

Reward to RIsk for Z > than SML Reward to Risk, then stock Z is overvalued.

8 0

3 years ago

Suppose you are salesperson for a company that manufactures and sells industrial equipment. Two or three of your key accounts pe

algol13

Answer:

d. Form a close partnership with individuals involved in order fulfillment (e.g., shipping and transportation) in an effort to make sure they are committed to meeting the special delivery requirements of those key accounts.

Explanation:

The sales person should make a close partnership with order fulfillment department in order to meet special delivery requirements by the key accounts. If the special delivery needs of key accounts is not addressed then they may discontinue buying the equipment from the company. To retain the key accounts the sales person has to ensure the order fulfillment team is committed in meeting the special delivery requirements by those key accounts.

5 0

3 years ago

Imagine you are a manager at Trader Dan's grocery store. You've been tasked with analyzing the checkout lines to see if anything

Bad White [126]

Answer: answer is 2.5

Explanation:

7 0

3 years ago

The impact fiscal multiplier is A. usually estimated to have an average value of 2. B. usually estimated to have an average valu

Delicious77 [7]

Answer:

D. the multiplier effect of a fiscal policy action that applies to a long-run period after all influences on equilibrium real GDP have been taken into account.

Explanation:

The fiscal multiplier measures the effect that increases in fiscal spending will have on a nation's economic output, or gross domestic product (GDP).

6 0

3 years ago

Suppose that last year $30 billion in new loans were extended by banks while $50 billion in old loans were paid off by borrowers

matrenka [14]

So, 30 billions were borrowed and 50 billion were returned, which means that the amount returned was bigger than the amount borrowed. This means that the there is now less money in the circulation (on people's accounts, money being exchanged between people), which means that the money supply decreased.

7 0

4 years ago