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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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At the beginning of a year, a company predicts total direct materials costs of $900,000 and total overhead costs of $1,170,000.
ASHA 777 [7]

Answer:

1.30

Explanation:

The cost of production is usually split into direct and indirect cost or overheads. the overheads is usually stated as a function of the direct cost( labour, machine hours, materials etc.)

The predetermined overhead rate

= $1,170,000/$900,000

= 1.3

This means that the company will incur an overhead cost of $1.30 for every $1 spent on direct materials.

6 0
2 years ago
During 2022, Oriole Company sold equipment with a book value of $158400 for proceeds of $191400. The company purchased new equip
kramer

Answer:

Cash Inflow of $191,400

Explanation:

There are three types of activities in the cash flow statement which are described below:  

1. Operating activities: It includes those transactions which affect the working capital after net income. The increase in current assets and a decrease in current liabilities would be deducted whereas the decrease in current assets and an increase in current liabilities would be added.  

These changes in working capital would be adjusted. Moreover, the depreciation expense is added to the net income

2. Investing activities: It records those activities which include purchase and sale of the long term assets. The purchase is an outflow of cash whereas sale is an inflow of cash

3. Financing activities: It records those activities which affect the long term liability and shareholder equity balance. The issue of shares is an inflow of cash whereas redemption and dividend is an outflow of cash.

In the given case, the sale proceed of equipment is consider in the investing activity i.e $191,400

5 0
3 years ago
Look at the following email (attached). Name two good email netiquette practices used in the
Kipish [7]

Two good email etiquettes practices used in email are:

  • Inserting a Subject
  • Keep the email short and restricted to three paragraphs.

Two bad email etiquettes used in the email above are:

  • Indiscriminate use of the exclamation mark
  • Discussing personal issues in a formal email.

<h3>What are email etiquettes?</h3>

The use of acceptable language, standards, and politeness in an email is referred to as email etiquette. Business emails often need formal language as well as rigorous respect to appropriate grammar and spelling.

Five useful E-mail Etiquette are:

  • Address your addressee appropriately. Check, double-check, and triple-check that you have the right spelling of the recipient's name and title.
  • Proper greetings and closing statements should be used.
  • Format correctly.
  • Avoid using ALL CAPS.
  • Large files should be compressed.

Learn more about email etiquette:
brainly.com/question/11498233
#SPJ1

8 0
1 year ago
Zeta, Inc., a calendar year taxpayer, suffers a casualty loss of $45,000. Zeta recovered insurance of $30,000. How much of the c
mezya [45]

Answer:

$15,000

Explanation:

Calculation to determine How much of the casualty loss will be a tax deduction to Zeta, Inc.

Using this formula

Casualty loss tax deduction=Casualty loss-Insurance recovered

Let plug in the formula

Casualty loss tax deduction=$45,000-$30,000

Casualty loss tax deduction=$15,000

Therefore the amount of the casualty loss that will be a tax deduction to Zeta, Inc. is $15,000

3 0
2 years ago
Mexico, Brazil, and Argentina all have __________ development.
Schach [20]

Answer:

Hey Friend.....

Explanation:

This is ur answer....

<h2>A. High</h2>

Hope it helps!

Brainliest pls!

Follow me! :)

6 0
2 years ago
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