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bezimeni [28]
3 years ago
6

The risk-free rate is 7% and the expected rate of return on the market portfolio is 11%. a. Calculate the required rate of retur

n on a security with a beta of 1.92. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. If the security is expected to return 15%, is it overpriced or underpriced?
Business
1 answer:
____ [38]3 years ago
3 0

Answer:

Required rate of return= 14.8

If the security is expected to return 15%, it is underpriced.

Explanation:

The required rate of return on the security can be calculated using the CAPM formula which states that

Required rate of return =rf + B(rm  - rf)

where rf= risk free rate

          B= beta of the security

          rm = return on the market

Required rate of return = 0.07 + 1.92(0.11-0.07) = 14.68%

If the security is expected to return 15%, it is underpriced, and is a good investment. Discounting the expected cash-flows from the security at this higher expected return of 15% is going to yield a lower price compared to what the investor is prepared to pay given his required rate of return of 14.68%.

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Pat shopped at Target for new summer shorts. After trying on three different brands and price comparing, he decided to buy the D
Vitek1552 [10]

Answer:

Shopping and convenience

Explanation:

Pat shopped at Target for new summer shorts. After trying on three different brands and price comparing, he decided to buy the Dockers shorts. While heading to the checkout stand, he spotted earphones hanging on the endcap of the electronics area. Remembering he needed new earbuds for his iPod, he grabbed a set and paid for it all at the checkout counter. What types of product categories did Pat experience in this shopping trip

Pat experience shopping and convenience product categories; the dockers shorts is the shopping product while the ear phone is the convenience product.

Shopping products are types of products categories in which a consumer takes his or her time to deliberate, research, compared on a product before they decided to buy the said product while convenience product is one that required no deliberation, the are usually routine products.

5 0
3 years ago
While harry was intoxicated, he sold his car to ben for substantially less than its fair market value. this contract is consider
VMariaS [17]
The answer to this question is that the contract is voidable. A voidable contract specificallt means that the contract can still be implemented or affirmed or rejected by one of the parties due to valid reasons. A situation where in a contract can be voidable is when the other party is not in the capacity to enter into a contract.
7 0
3 years ago
as a rule of thumb, when renting an apartment your monthly rent should not be more than the amount you earn in ___ a. one week b
pav-90 [236]

Answer:

1 week

Explanation:

7 0
3 years ago
Read 2 more answers
Over the past several years, like other auto manufacturers, General Motors (GM) has introduced many new models of sport utility
Aleonysh [2.5K]

Answer:

D. Market maturity

Explanation:

Over the past several years, like other auto manufacturers, General Motors (GM) has introduced many new models of sport utility vehicles (SUVs) in all of its major divisions. This proliferation of SUVs and an increase in gasoline prices have caused sales to level off. In response, General Motors offered rebates of up to $5,000, or no-interest financing, on selected models of SUVs. The largest rebates went to current owners of GM vehicles, so that they would replace their current vehicles with a GM model instead of switching to another brand. The rebates have been heavily advertised on national television. Profit margins per vehicle have shrunk as a result of these costly promotions.

General Motors is currently operating in the Market maturity stage of production life cycle.

6 0
3 years ago
In Vintland, sanitation engineers are being replaced with garbage robots, which have fewer negative effects and many more signif
pychu [463]

Answer: GDP decreases and standard of living increases

Explanation:

Based on the information given, the short-run effects of this industrial change on Vintland's GDP and its standard of living is that there'll be a reduction in the gross domestic product and an increase in the standard of living.

The reduction in GDP will be as a result of the reduction in the price of collecting garbage. On the other hand, the replacement of the sanitation engineers with the garbage robots will have fewer negative effects and many more significant benefits, thereby increasing standard of living.

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