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3 years ago

If the market risk premium increased to 6%, what would happen to the stock's required rate of return

Business

1 answer:

Inessa [10]3 years ago

7 0

Answer:

13%

Explanation:

As per the situation the solution of required rate of return first we need to find out the beta which is shown below:-

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

11% = 7% + Beta × 6%

Beta = 1

now If the market risk premium increased to 6% so,

The required rate of return = 7% + 1 × 6%

= 13%

Therefore for computing the required rate of return we simply applied the above formula.

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1 year ago

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3 years ago

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3 years ago

A company understated its ending inventory balance by $5,000 in 2018. What impact will this error have on cost of goods sold and

madreJ [45]

Answer:

COGS overstated for 5,000

Explanation:

<em>The COGS will be overstated for the same ammount,</em> that is because of the inventory identity.

$$$Beginning Inventory + Purchase = Ending Inventory + COGS$

If ending Inventory has a problem, it will be transferred to COGS as well to equalize the formula

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3 years ago