Answer: 1.9%
Explanation:
First derive the Market return as this is needed in the Capital Asset Pricing Model by using the same model:
Required return = Risk free rate + Beta * ( market return - Risk free rate)
Using stock Y:
12.4% = Risk free rate + 1 * (market return - Risk free rate)
12.4% = Rf + market return - Rf
Market return = 12.4%
Use this to calculate the Risk free rate:
Stock Z:
8.2% = Rf + 0.6 * (12.4% - Rf)
8.2% = Rf + 7.44% - 0.6Rf
Rf - 0.6Rf = 8.2% - 7.44%
0.4Rf = 0.76%
Rf = 0.76% / 0.4
= 1.9%
Answer:
The economic concept of scarcity.
Explanation:
In economics, <em>scarcity</em><em> </em>represents the phenomenon of <em>limitless</em> <em>wants</em> suppressed by <em>limited</em><em> </em><em>resources</em>.
In this case, Allie feels she needs $90 shoes while she has not got the resources required to buy them.
This typical economic problem can be solved by moderating one's wants and clearly identifying what is priority from what is not, then intelligently making decisions on what available resources should be spent.
