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
mylen [45]
3 years ago
15

Dee's Fashions has a growth rate of 5.2 percent and is equally as risky as the market while its stock is currently selling for $

28 a share. The overall stock market has a return of 12.6 percent and a risk premium of 8.7 percent. What is the expected rate of return on this stock?
Business
1 answer:
emmasim [6.3K]3 years ago
5 0

Answer:

12.6%

Explanation:

Using the Capital Market Pricing Model (CAPM) to compute the expected rate of return on Dee's Fashion stock.

Expected rate of return = R_{f} +\beta (R_{m} -R_{f} )

Where R(f) = risk free rate of return, or market return less risk premium = 12.6% - 8.7% = 3.9%

\beta = the risk of the stock relative to the market risk. In this case, beta = 1, since the company is equally as risky as the market (as noted in the question)

R(m) = return of the stock market = 12.6%

Therefore, the expected rate of return on the stock

= 3.9% + 1 * (12.6% - 3.9%)

= 3.9% + 8.7%

= 12.6%.

The return is the same as the stock market return because the stock is equally as risky as the market.

You might be interested in
Which of the following equations describes customer value?
Vlad1618 [11]

Answer:

A. Customer value = customer benefits - customer cost

Explanation:

The customer value is the worth of a product or a service as compared to other alternatives in the standpoint of a customer.

It is basically like the worth of obtaining a product or a service is to a customer. Customer value can be considered how a customer benefits from the product minus the cost of obtaining the product.

Benefits and cost does not always have to be in the form of cash. A benefit can be in the form of quality, value, experience and cost can be in terms of time, effort, or energy.

4 0
4 years ago
Rocky Guide Service provides guided 1–5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead
o-na [289]

Answer:

Please find the complete question in the attached file.

Explanation:

Rocky believed there would be a 30\% possibility of a July bonus for touring, i.e < 50\%, from July 1-July 15 (10 days)-. Therefore no bonus can be calculated as \$2,400 / day trip \times 10 days =\$2,400 throughout this duration.

The expected 15-day revenues from 16th July – 31st July may well be calculated as \$2,400 \times 15 \ days = \$36.000. Rocky calculated that it would get the bonus 80\% of the time. Estimates a \$240/day\ bonus \times (10\ days + 15\ days) = \$6,000

3 0
3 years ago
Misra Inc. forecasts a free cash flow of $ 35 million in Year 3, ie, at t = 3, and it expects FCF to grow at a constant rate of
Ray Of Light [21]

Answer:

the answer for this question is 1289.44

8 0
3 years ago
To build a business for the future requires the ability to think in abstract terms and to see "the big picture" to keep everyone
Dimas [21]

Answer:

The correct answer is E. Conceptual skills .

Explanation:

Conceptual skills are highly valued from the management perspective. People with a certain degree of responsibility within an organization are frequently exposed to very complex dilemmas that are not easy to address.

We could define conceptual skills as the ability to think creatively, analyze and understand complicated and abstract ideas. They are skills that allow an individual to understand complex situations to develop creative and successful solutions. They are skills that are not taught or learned, but manifest in real situations as part of creative thinking.

5 0
3 years ago
A reorder of an existing product or service from a list of acceptable suppliers is referred to as a:
vlabodo [156]

Organizational buyers. A reorder of an existing product or service from a list of acceptable suppliers is referred to as a. straight rebuy.

brainliest plsss

5 0
2 years ago
Other questions:
  • The purpose of the snapple video is to help students understand how _________ is an effective strategy implementation tool.
    8·1 answer
  • In advertising, rating refers to multiple choice the geographic region to which an advertising campaign will be directed. the gr
    12·1 answer
  • What is one of the advantages of buying an existing business
    7·1 answer
  • What has been the impact of declining harvests and years of drought on african subsistence farmers?
    13·1 answer
  • ÂOaktree, Inc. is a merchandiser of inlaid wooden boxes. The company sold 7,500 units during the year. The company has provided
    7·1 answer
  • Let's assume that in a hypothetical economy currency in circulation is $600 billion, the amount of checkable deposits is $900 bi
    10·1 answer
  • Candy or cookies? i want to know
    13·1 answer
  • For a cheese-lover, Burger King's Mac n' Cheetos are what type of product? (1pt)
    15·1 answer
  • Several months ago, a restaurant developed a new appetizer that is a hit with customers. Many customers go to the restaurant jus
    11·1 answer
  • Shane's buyers learned during the inspection that there was water damage around the fireplace and that the chimney needed new fl
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!