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Free_Kalibri [48]
3 years ago
14

Assume that a risky security pays an average cash flow of $100 in one year. The risk-free rate is 5%, and the expected return on

the market index is 13%. If the returns on this security are high when the economy is strong and low when the economy is weak, but the returns vary by only half as much as the market index, what risk premium is appropriate for this security
Business
1 answer:
ki77a [65]3 years ago
8 0

Answer:

The risk premium appropriate for this security is 4%.

Explanation:

The returns vary by only half as much as the market index which means that the security half as risky as the market.

The risk-premium for the security should be half of the market risk premium.

Market risk premium is calculated by = Expected return on the market - Risk free rate

Market risk premium = 13% - 5% = 8%

The risk premium on the security would be 8% / 2 = 4%

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Vadim26 [7]

Answer:

rule of law

Explanation:

3 0
2 years ago
5. Keisha is renting a one-bedroom apartment but allows her best friend to
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The renter insurance policy will cover:

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<h3>What is a renters insurance?</h3>

This is an insurance policy that covers losses to personal property and protects the insured from liability claim.

Hence, these insurance policy will provide for compensation for Keisha because she is the property owner and partial (i.e. 10%) coverage for loss of visitors property/

In conclusion, the renter insurance policy will cover Keisha’s laptop and TV and 10% of the cost of her friend’s laptop and headphones

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3 0
2 years ago
Traditionally, raw materials and component parts were delivered to producers well in advance of the manufacturing process and st
Makovka662 [10]
<span>With​ just in time production, these raw materials and component parts are now delivered to the producer exactly when they are needed.
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3 0
3 years ago
Read 2 more answers
A process cost system would be used for all of the following except the :____________
yuradex [85]

Answer:

d. printing of wedding invitations.

Explanation:

Process costing can be regarded as accounting methodology which involves the tracing as well as accumulation of direct costs, then carry it the allocation of indirect costs of a manufacturing process. There is usually assigning of Costs to products, which is in a large batch, this might not encompass an entire production of that month.

process cost system would be used for ;✓refining of petroleum.

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3 0
3 years ago
An economist is interested in studying the incomes of consumers in a particular country. The population standard deviation is kn
ki77a [65]

Answer:

A. 232.6

Explanation:

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width = z * \frac{standard deviation}{\sqrt{sample size} }

width = 1.645 * \frac{1000}{\sqrt{50} } = 232.6

3 0
3 years ago
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