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vlabodo [156]
3 years ago
11

The risk premium for exposure to aluminum commodity prices is 4%, and the firm has a beta relative to aluminum commodity prices

of .6. The risk premium for exposure
to GDP changes is 6%, and the firm has a beta relative to GDP of 1.2. If the risk-free rate is 4%, what is the expected return on this stock?

A.
14.4 percent

B.
10.0 percent

C.
13.6 percent

D.
11.5 percent Please show work
Business
1 answer:
sp2606 [1]3 years ago
5 0

Answer:

C.  13.6 percent

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × risk-free rate of return + Beta × market risk premium

= 4% + 0.6 × 4% + 1.2 × 6%

=  4% + 2.4% + 7.2%

= 13.6%

The (Market rate of return - Risk-free rate of return)  is also known as market risk premium

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Answer:

B

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6 0
2 years ago
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Fittoniya [83]

उत्तर

यासाकी चान

दृढ़निश्चयी था और एक मेहनती कार्यकर्ता था।

4 0
3 years ago
The marginal tax rate for a lump-sum tax a. is always positive. b. is zero. c. can take on any value but must be greater than th
o-na [289]

Answer:

b. is zero.

Explanation:

Taxation can be defined as the involuntary or compulsory fees levied on individuals or business entities by the government to generate revenues used for funding public institutions and activities.

There are three (3) types of taxation used by the government, these are;

1. Progressive taxation: it involves charging individuals having higher incomes a higher percentage of their total income.

For instance, Citizen A pays 20% on $50,000 and Citizen B pays 15% on $36.000.

2. Proportional taxation: it involves charging both lower and higher income earners equally in proportion to their income.

For instance, Citizen A pays 10% on $50,000 and Citizen B pays 10% on $36,000.

3. Regressive taxation: it involves charging individuals with low incomes a higher percentage of their total income and vice-versa.

For instance, Citizen A pays 15% on $50,000 and Citizen B pays 20% on $36,000.

The marginal tax rate for a lump-sum tax is zero because an additional amount of money would not change it.

7 0
2 years ago
The range rule of thumb roughly estimates the standard deviation of a data set as​ _______.
goblinko [34]
Range is the measure of variation that is very sensitive to extreme values. It is the difference between high and low values, while standard deviation is the standard measure of variation.The range rule of thumb roughly estimates the standard deviation of a data set as s=range/4 , where s stands for standard deviation and
<span>range = Maximum - Minimum</span>
5 0
3 years ago
Henry Company traded in an old delivery truck for a new one. The old truck had a cost of $78,000 and accumulated depreciation of
babymother [125]

Answer:

The new truck will enter the account with the invoice value.

new truck 122,000

ac dep old truck 44,000

loss on trade 22,000

Cash 110,000

Old Truck 78,000

Explanation:

Old truck 78,000

acc depreciation 44,000

net-book value 34,000

trade-in allowance 12,000

loss on trade 22,000

The new truck will enter the account with the invoice value.

6 0
3 years ago
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