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denis-greek [22]
3 years ago
15

Suppose you observe the following situation:

Business
1 answer:
Finger [1]3 years ago
3 0

Answer:

a. The expected return on the market is 10.89%

b. The risk-free rate is 1.52%

Explanation:

In order to calcuate the expected return on the market and the he risk-free rate we would have to use the following formulas:

Expected return=risk-free rate +Beta*(market rate- risk-free rate )

13.23=Rf+1.25*(Rm-Rf)

13.23=1.25Rm-0.25Rf

Rm=(13.23+0.25Rf)/1.25

To calculate the risk free rate, we use the following:

9.67=Rf+0.87*(Rm-Rf)

9.67=0.13Rf+0.87Rm

9.67=0.13Rf+0.87*(13.23+0.25Rf)/1.25

9.67=0.13Rf+9.20808+0.174Rf

Rf=(9.67-9.20808)/(0.13+0.174)

=1.52%(Approx)=risk free rate

Rm=(13.23+0.25Rf)/1.25

=10.89%(Approx)=market rate

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3 years ago
Jackson Co. began the year with $20,000 in inventory. During the year, the company purchased $80,000 worth of inventory. At the
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Answer:

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In economics, a country's current account balance records the value of imports and exports of goods and services, and the international transfer of capital. It is one of the two components of the balance of payments, the other being the capital account.

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Setting a specific income level and then defining a person (or household) as poor if his or her (or its) income falls below that
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