1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
kow [346]
4 years ago
11

The expected return on the market portfolio is 19%. The risk-free rate is 12%. The expected return on SDA Corp. common stock is

18%. The beta of SDA Corp. common stock is 1.40. Within the context of the capital asset pricing model, _________.
Business
1 answer:
trasher [3.6K]4 years ago
7 0

Answer:

SDA Corp. Stock Alpha is 3.80%

Explanation:

If we calculate the expected return on SDA Corp. stock through Capital asset pricing model, we will get:

CAPM = Risk Free Rate + (Return on market portfolio - Risk free rate) * Beta

CAPM = Rf + (Rm - Rf)*β

CAPM = 12% + (19% - 12%)*1.40

CAPM = 12% + 9.8%

CAPM = 21.8%

The expected return on stock through CAPM is 21.8%, whereas, the expected return of SDA Corp. common stock is 18%. Therefore, the stock Alpha is 21.8% - 18% = 3.80%

You might be interested in
Bi-Lo Traders is considering a project that will produce sales of $56,300 and have costs of $31,700. Taxes will be $5,500 and th
Kruka [31]

Answer:

Project's Operating cash inflow is $16,500

Explanation:

Operating cash flows are cash inflow and outflow generated from to day to day business activities. All the cash flows needed to operate the business smoothly.

Operating Cash flows from indirect method is calculated by adding non cash items in net income and any other working capital adjustment to the cash flows.

Net Income = Sales - Costs - depreciation - Taxes = $56,300 - $31,700 - $3,400 - $5,500 = $15,700

because the depreciation is an non cash expense so, it will be added back to the net income for the calculation of Net operating cash flows. Outlay in Net working capital will reduce the net operating cash flow, so it will be deducted.

Net Operating cash flow = $15,700 + $3,400 - $2,600 = $16,500

4 0
4 years ago
use the rule of 72 to calculate how long it will take for your money to double if it's earning 6% in interest
marissa [1.9K]
It would take by my calculations around 16 yrs but that is just an hypothesis

<span />
7 0
4 years ago
According to the path –goal theory of leadership, path clarification means that the leader works with subordinates to help them
otez555 [7]

Answer:

True

Explanation:

The path-goal theory emphasizes a leadership style that enhances the performance of the subordinates by helping team members identify clearly the path through which they would accomplish their goals coupled with the fact that such accomplishment would be met by great rewards.

In achieving the desired results under the path-goal theory, employees are reminded of behaviors that would yield positive outcomes since the right attitude which is a product of behavior is important to deliver on job set targets.

Having the right positive mental attitude sets success apart from failure.

5 0
3 years ago
Read 2 more answers
Which of the following statements is true regarding the relationship of education to income?
Deffense [45]
B is correct better job better money
6 0
4 years ago
Andre Company does not segregate sales and sales taxes when it charges customers at the register. Its register total for a given
ahrayia [7]

Answer:C- $5,381 and $343

Explanation:

Andre Company had sales of $5,724 which has a 6% sales tax included in the sales.

Therefore we need to calculate what the sales tax component in the sales figure is. It is calculated thus:

Total sales including tax = $5, 724

Sales tax charged is 6%

Therefore actual sales = $5,724 * 6%

Equals $343

Adjusted sales is $5,724-$343= $5,381.

Adjusted Sales figure is $5,381

Tax on sales is $343

6 0
3 years ago
Other questions:
  • Pete and Amanda obtain a mortgage for $205,000 for 30 years at a fixed rate of 7.75%. Their monthly payment amount is $1,468.65.
    7·1 answer
  • Corporate shareholders are best protected from incompetent _______.
    15·2 answers
  • The Proclamation of 1763 declared that _____. the french
    6·1 answer
  • Somerset Company's Cash account shows an ending balance of $800. The bank statement shows a $25 service charge and an NSF check
    14·1 answer
  • Your uncle comes to you with an investment idea. He tells you that the nominal GDP of Paradisia quadrupled over the past year an
    13·2 answers
  • Peter Lynchpin wants to sell you an investment contract that pays equal $13,200 amounts at the end of each of the next 22 years.
    6·1 answer
  • If aggregate expenditures increase by $14 billion and equilibrium GDP consequently increases by $70 billion, then the marginal p
    10·1 answer
  • For my hero acadamia fans.
    9·2 answers
  • The intention of a price floor is to help producers by setting a higher than equilibrium price. What is one unintended consequen
    13·1 answer
  • The negative impact of the coronavirus as one of the socio- economic issues on businesses <br>​
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!