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stepladder [879]
3 years ago
5

The risk-free rate is 6%; Stock A has a beta of 1.0; Stock B has a beta of 2.0; and the market risk premium, rM − rRF, is positi

ve. Which of the following statements is CORRECT?a. Stock B's required rate of return is twice that of Stock A.b. If Stock A's required return is 11%, then the market risk premium is 5%.c. If Stock B's required return is 11%, then the market risk premium is 5%.d. If the risk-free rate remains constant but the market risk premium increases, Stock A's required return will increase by more than Stock B's.e. If the risk-free rate increases but the market risk premium stays unchanged, Stock B's required return will increase by more than Stock A's.
Business
1 answer:
Natasha_Volkova [10]3 years ago
8 0

Answer:

b. If Stock A's required return is 11%, then the market risk premium is 5%

Explanation:

Let's analyze each choice with the CAPM formula; r= risk free+beta(mrkt return - risk free)

a.)

Assume market return is 8%

rA= 6% +1 (8% - 6%)= 8%

rB= 6% +2 (8% - 6%)= 10%

Since stock B's return is not twice that of stock A, choice a.) statement is WRONG.

b.)

Formula ; r= risk free+beta(mrkt return - risk free)

Find MRP if rA=11% knowing that MRP = (mrkt rate - risk free)

11% = 6% +1 (11% - 6%)

Therefore MRP= 11%-6% = 5% making choice b. CORRECT

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TEA [102]
<span>The federal organization charged with monitoring illegal workplace discrimination is called the equal employment opportunity commission (EEOC).

When you are applying for a job or working for a company it is illegal for them to not pick you of something based on what you look like or your gender, nationality and the characteristics that make you, you. Each person regardless of what they look like have to be treated the same and given equal employment opportunity. If there is known discrimination in the workplace, there is a hotline that employees can call to report their workplace to the EEOC.
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7 0
3 years ago
Your regular selling price is $40 per unit. Costs are $28 per unit, which consists of $8 direct materials per unit, $10 direct l
amid [387]

Answer:

Effect on income= $6,000 increase

Explanation:

<u>Because there is an unused capacity and it is a special order, we will not take into account the fixed costs.</u>

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3 0
3 years ago
If you have a credit card with 12.99% APR that compounds daily, what is the effective
gregori [183]

Answer: 13.87%

Explanation:

Effective interest rate is calculated by the formula:

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Number of compounding periods = 365 days in a year

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3 0
3 years ago
What is the definition of customer service?
sukhopar [10]
D, that would most likely be a common answer because why would costumer service be provided by a company instead of the sales rep?
5 0
3 years ago
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valentina_108 [34]

Answer:

D). defaulted on the security agreement.

Explanation:

From the question we are informed about Hiram who is a debtor to Central Credit Union, a secured party. If Hiram fails to maintain insurance on the collateral, he has likely defaulted on the security agreement.

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covenants which states provisions for the advancement of funds as well as

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6 0
3 years ago
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