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MA_775_DIABLO [31]
3 years ago
5

According to the CAPM, what is the market risk premium given an expected return on a security of 15.8%, a stock beta of 1.1, and

a risk-free interest rate of 7%? Multiple Choice 7.70% 6.05% 7.00% 8.00%
Business
1 answer:
Anna35 [415]3 years ago
3 0

Answer:

The risk premium on market is 8%

Explanation:

The CAPM or Capital Asset Pricing Model is used to calculate the required rate of return on a stock which is the minimum return that is expected or required by the investors to invest in a stock based on its systematic risk as measured by the beta of the stock.

The formula to calculate r under the CAPM is,

r = rRF + Beta * rpM

Where,

  • rRF is the risk free rate
  • rpM is the risk premium on market

To calculate the risk premium on market, we will input the available values for r, rRF and beta in the equation above.

0.158 = 0.07 + 1.1 * rpM

0.158 - 0.07 = 1.1 * rpM

0.088 / 1.1 = rpM

rpM = 0.08 or 8%

So, the risk premium on market is 8%

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Naya [18.7K]

Explanation:

In the scenario described above, it can be identified that the behavioral characteristic of the manager is that he is an aggressive person.

This type of behavior has as main characteristics the expression of your ideas, needs and feelings to the detriment of those of other people, this can be seen in the question in the excerpt that says that the manager made an important decision for the business without consulting his superiors because you believe they feel the same way about the economy as you do.

Although this aggressive behavior can sometimes be expressive, it can also lead to hostility.

6 0
3 years ago
please discuss the similarities and differences between transformational and charismatic leadership. Choose an individual that q
Nookie1986 [14]

Answer:

The transformational leaders are bureaucratic and charismatic are people oriented in nature.

Explanation:

  • The charismatic leaders are also called as the transformational leaders and shares various things.
  • Charismatic leaders make their status better and transformational leaders focus on the transformation of the organization's vision. The main difference is the focus and the audience.
  • The charismatic leaders are committed and have engaging personalities like martin Luther king as his speeches were often more tangible than other leaders and used to have a huge influence on the people he met.
  • The charismatic leaders are more emotionally attached to their audience. They work towards an emphasis on the greater good. More people-oriented.

6 0
3 years ago
According to the efficient market theory, A. prices of actively traded stocks can only be under-valued in an efficient market B.
Otrada [13]

Answer:

The correct answer to the following question will be Option D.

Explanation:

  • The theory or hypothesis that even as soon as it arrives, all institutional investors obtain as well as act on most of the necessary information or data. Even if this was purely real, there would have been no stronger investing strategy than just a coin flip.
  • As per this principle, the dynamically trading share prices in such a competitive market don't vary from actual measured value or beliefs.

The other choices have no relation to the given circumstance. So choice D is the correct answer to the above.

7 0
3 years ago
Identify her/his entrepreneurial qualities and support your answer based on what you observed
Masja [62]

The main qualities of real entrepreneur are:

1) spiritual freedom and energy;

2) willpower;

3) ability to effectively negotiate and convince partners and customers;

4) organizational skills;

<span>5) determination and willingness to situations of risk.</span>

5 0
4 years ago
An economist resigns her $100,000/year university teaching position to work fulltime in her own consulting business. In the firs
lilavasa [31]

Answer:

ii. Her accounting profit was $150,000

iii. Her economic profit was $50,000

Explanation:

The computation is shown below:

For accounting profit, it is

= Total revenues - total expenses i.e explicit cost

= $250,000 - $100,000

= $150,000

And, for economic profit

= Total revenues - total cost i.e explicit and implicit cost

= $250,000 - $100,000 - $100,000

= $50,000

Hence, the second and third options are correct

7 0
3 years ago
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