Answer:
4.5%
Explanation:
The formula to compute the expected rate of return under the CAPM model is shown below:
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
For stock r, the required rate of return is
= 7% + 1.5× (13% - 7%)
= 7% + 1.5 × 6%
= 16%
For stock s, the required rate of return is
= 7% + 0.75× (13% - 7%)
= 7% + 0.75 × 6%
= 11.5%
So, the difference of required rate of return is
= 16% - 11.5%
= 4.5%
The Stock R has high riskier stock whereas the stock S has less riskier stock due to beta
Answer:
Transparency through blockchain. It may have gained notoriety as the technology that provides the infrastructure for bitcoin, but blockchain is poised to play a bigger and more important role for gig workers in the years ahead...
Explanation:
Answer:
If the Federal Reserve engages in a fourth round of quantitative easing, then the inflation rate will [Increase, Decrease, or remain the same] and the unemployment rate will [increase, decrease, or remain the same] in the short run.
These changes occur as a result of the aggregate demand curve [increasing, decreasing, or remaining the same] and the aggregate supply curve [increasing, decreasing, or remaining the same].
Explanation:
The Federal Reserve's fourth round of Quantitative Easing (QE) is the central bank monetary policy which enables it to buy government bonds and other assets from the open market in order to inject more money or increase the money supply in the economy, thereby expanding economic activity by encouraging lending and investments. QE can cause inflation if demand grew faster than supply as it takes longer for the velocity of money – the speed at which capital zooms through the economy and turns over – that is, to permeate the economy.
Answer:
b. adjusting the discount rate.
Explanation:
The increased risk of foreign investments is most often incorporated in capital budgeting models by <u>adjusting the discount rate.</u> This reason is whenever the foreign exchange risk is perceived to be high then the discount rate is increased by to incorporate higher risk.
Answer:
The correct answer is: $5,140.80.
Explanation:
Simple Interest is a quick method of calculating the interest charged on a loan or the interest accrued out of an investment. It is determined by multiplying the interest rate by the principal by the number of periods. It is one of the most common methods used in finance to calculate the return on certain investments.
In the example, the number of years considered to calculate the interest is 17 because the 18th year on interest is realized by the end of that year. Thus:
- Deposit per year: $140
- Interest per year: $140 x 12% = $16.80
- Interest accrued: $16,8 x 17 = $285.60
- Total savings: (Deposit per year x number of years) + interest accrued
- Total savings: ($140 x 18) + $285.60
- Total savings: $5,140.80
