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Maksim231197 [3]
3 years ago
10

Stock Y has a beta of 1.40 and an expected return of 14.8 percent. Stock Z has a beta of .85 and an expected return of 11.3 perc

ent. If the risk-free rate is 4.85 percent and the market risk premium is 7.35 percent, are these stocks overvalued or undervalued?
Business
1 answer:
tresset_1 [31]3 years ago
4 0

Answer:

Stock Y has overvalued and Stock Z as undervalued

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

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

For Stock Y

= 4.85% + 1.40 × 7.35%

= 4.85% + 10.29%

= 15.14%

For Stock Z

= 4.85% + 0.85 × 7.35%

= 4.85% + 6.2475%

= 11.0975%

The (Market rate of return - Risk-free rate of return) is also called market risk premium and the same is applied in the answer

As we see the expected return of both the stock So, Stock Y has overvalued and Stock Z as undervalued

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ollegr [7]

Answer:

The answer is given below;

Explanation:

 $160,000*(3/4)*1%=$1,200

Bad Debt Expense   Dr.$1,200

Allowance for Doubtful Accounts Dr.$1,200

$65,000*12%=$7,800

$12,000*24%=$2,880

$3,000*48%=$1,440

Total Allowance for Doubtful Accounts for December 31, $12,120

Total Allowance for Doubtful Accounts Opening                ( $1,100)

Bad Debt Expense for the year                                             $11,020

Bad Debt Expense Dr.$11,020

Allowance for Doubtful Accounts Cr.$11,020

Various Accounts to be shown pertaining to Account Receivable will be;

1.Allowance for Doubtful Accounts -Balance Sheet   $12,120

4 0
3 years ago
Which of the following are examples of companies operating a globalized world? Check all that apply
Wewaii [24]

<u>Answer:</u>

A. San Francisco-based Airbnb used #OneLessStranger to spark an international social media campaign in which it asked its community of customers to perform random acts of hospitality for strangers, then share a video or photo of themselves with the person they helped.

B. Dunkin' Donuts serves dry pork and seaweed donuts in China and grapefruit donuts in Korea.

C. Austria's Red Bull sponsors extreme sports events across Europe, North and South America, and Asia, making its drinks feel like a local presence while the company maintains a European look to its packaging.

<u>Explanation:</u>

Globalization is the distribution throughout national boundaries and traditions of goods, technology, knowledge and employment. This defines in terms of economics an inter-connectivity of countries across the globe that is promoted by free trade.

This seeks to support consumer economies worldwide by rendering markets more effective, increasing competition, reducing military conflicts, and more evenly distributing wealth. While the impoverished and the rich benefit from globalism in the median developing economy, it often has little impact on the incomes of the needy in many developed economies. Yet government actions are important in making globalization's advantages more comprehensive.

8 0
3 years ago
Jason has many roles in life. He is an engineering student in college, he's the oldest son in his family, and he earns extra mon
aleksandrvk [35]

Answer:

C.

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Being an editor for a local newspaper counts as an economic sense because that is the only part that takes part as a job and helps the economy.

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3 years ago
George's Chemicals allocates overhead based on machine hours. Selected data for the most recent year follow. Estimated manufactu
ale4655 [162]

Answer:

$256,284

Explanation:

The computation is shown below:

First, Calculate the predetermined overhead rate per hour which equals to

=  (Estimated manufacturing Overhead cost ÷ estimated machine hours)  

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So, the applied overhead or manufacturing overhead allocated equals to

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4 0
3 years ago
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boyakko [2]

Answer:

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Note that when a significant amount of a population come from a certain ethnic group, demand for ethnic products is more likely to increase. Thus, this has made Marco feel very much at home.

3 0
3 years ago
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