The answer to this question is Law of Supply.
Answer: <em>c. The required returns on all stocks have fallen, but the fall has been greater for stocks with higher betas.</em>
Explanation:
The Capital Asset Pricing Model formula can be applied to this question.
The formula is,
Er = rF + b( rM - rF)
Where
Er is the required return
rF is the risk free rate
b is beta
rM - rF is the market premium.
Now looking at that formula, you can tell that if market premium falls, the required return would fall as well.
However, for stocks with larger betas, they would drop more spectacularly because they would be coming from higher values to lower.
Take a stock with beta 4 vs one with beta 5 for instance.
Assume that Market premium went from 6% to 3% and a risk free rate of 3%.
<u>Beta 5 stock </u>
When market premium is 6,
= 3% + 5 (6%)
= 33%
When market premium is 3,
= 3% + 5(3%)
= 18%
<u>Beta 4 stock </u>
When market premium is 6
= 3% + 4 (6%)
= 27%
When market premium is 3
= 3% + 4 (3%)
= 15%
Notice how the stock with beta 5 fell by 15% while the stock with beta 4 fell by 12%.
Supply Side Economics.
Supply-side economics is a macroeconomic theory arguing that economic growth can be most effectively created by lowering taxes and decreasing regulation,
Answer:
(B) Activities can be started when immediate predecessors are only partially completed.
Explanation:
Precedence diagram method (PDM) is a visual representation technique that depicts the activities involved in a project. It is a method of constructing a project and connects them with arrows that show the dependencies. This method shows the dependencies of one step from their predecessors.
Answer:
7.76%
Explanation:
In this question, we use the PMT formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Present value = $969
Future value = $1,000
Rate of interest = 8.1%
NPER = 17 years
The formula is shown below:
= PMT(Rate;NPER;-PV;FV;type)
The present value come in negative
So, after solving this, The PMT would be $77.58
The coupon rate is shown below:
= (Coupon payment ÷ par value) × 100
= ($77.58 ÷ $1,000) × 100
= 7.76%