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
Nadusha1986 [10]
3 years ago
8

Parr Paper's stock has a beta of 1.442, and its required return is 13.00%. Clover Dairy's stock has a beta of 0.80. If the risk-

free rate is 4.00%, what is the required rate of return on Clover's stock?
Business
1 answer:
Viktor [21]3 years ago
3 0

Answer:

Required rate of return on clover's stock is 8.99%

Explanation:

The required rate of return on Clover's stock can be computed using Miller and Modgliani capital asset pricing model formula given below:

Ke=Rf+beta*(Rm-Rf)

Ke is the required rate of return, the unknown

Rf is the risk free rate of return of 4.00%

beta for Clover is 0.80

Rm is the not known as well but can computed using the Parr paper's details below:

beta is 1.442

required return IS 13%

13.00%=4.00%+1.442*(Rm-4.00%)

13%-4%=1.442*(Rm-4.00%)

9%=1.442*(Rm-4.00%)

9%/1.442=Rm-4%

6.24% =Rm-4%

Rm=6.24%+4%

Rm=10.24%

Now the required return on Clover's stock can be computed

Ke=4%+0.8*(10.24%-4%)

Ke=8.99%

You might be interested in
True or False: Market segmentation is the process of dividing the market into groups of customers based on their needs, wants, a
nalin [4]

Answer:

true

Explanation:

Market segmentation is the process of dividing prospective consumers into different groups depending on factors like demographics, behavior and various characteristics.

3 0
2 years ago
Which pharmaceuticals company has decided to expand its vaccine business in the United Kingdom with an investment of £240 millio
Volgvan

Answer:

Which pharmaceuticals company has decided to expand its vaccine business in the United Kingdom with an investment of £240 million?

answer= B.) Serum Institute of India

4 0
2 years ago
Read 2 more answers
#7. Which is the most likely scenario in which someone would take out a short-term loan with a bank?
3241004551 [841]
Since it is a short term loan, it wouldn't be a second home or a car, because those are paid for over the course of YEARS.
A skateboard is usually ~100$ and doesn't need a loan. 

Your answer is C) To pay for credit card debt
6 0
3 years ago
In Marubeni America Corp. v. United States, the federal appellate court ruled that the Nissan Pathfinder was, for tariff classif
Hitman42 [59]

Answer: the tariffs will vary depending on the classification.

Explanation:

Tariff is a form of tax that is usually imposed on the imports that are brought from other countries to a particular country.

With regards to information provided in the question, the classification of goods is significant because the tariffs will vary depending on the classification.

6 0
2 years ago
MC Qu. 36-46 (Algo) Answer the question...
Afina-wow [57]

Answer:

sorry I was just wondering if you want to be a good

6 0
3 years ago
Other questions:
  • "To get out the vote" is an example of what type of mission statement?
    9·2 answers
  • Real property is _____.
    5·2 answers
  • All of the following are guidelines for budgeting except:
    14·1 answer
  • Describe a product that you think has saturated its market
    7·1 answer
  • If there was a 24% chance of having a contract signed to purchase a home in any one month and there were 55 homes on the market,
    5·1 answer
  • Spears Co. had net sales of $35,400 million. Its average total assets for the period were $14,700 million. Spears' total asset t
    6·2 answers
  • Accumulated Depreciation is:a. contra asset account b. is used to show the amount of cost expiration of intangibles c. is the sa
    6·2 answers
  • ACS Industries is considering a project with an initial cost of $6.2 million. The project will produce cash inflows of $1.8 mill
    13·1 answer
  • How much do actors make in a year?
    13·2 answers
  • What’s the bestselling movie soundtrack of all time?
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!