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ElenaW [278]
3 years ago
15

You own a stock that has an expected return of 15.72 percent and a beta of 1.33. The U.S. Treasury bill is yielding 3.82 percent

and the inflation rate is 2.95 percent.
What is the expected rate of return on the market?

a) 12.07 percent

b) 12.77 percent

c) 13.64 percent

d) 14.09 percent

e) 13.42 percent
Business
1 answer:
Elza [17]3 years ago
3 0

Answer:

option (b) 12.77 percent

Explanation:

Data provided in the question:

Expected return = 15.72% = 0.1572

Beta = 1.33

Risk free rate = 3.82% = 0.0382

Inflation rate = 2.95% = 0.0295

Now,

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

or

0.1572 = 0.0382 + 1.33 × ( Expected market return - 0.0382 )

or

0.119 = 1.33 × ( Expected market return - 0.0382 )

or

Expected market return - 0.0382 = 0.08947

or

Expected market return = 0.12767

or

Expected market return = 0.12767 × 100% = 12.767% ≈ 12.77%

option (b) 12.77 percent

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Choose the correct description for the following money market instrument. A certificate of deposit is:
gulaghasi [49]

A correct option is option (c). A certificate of deposit is a debt instrument sold by a bank to depositors that pays annual interest on a given amount and at maturity pays back a debt instrument sold by a bank to depositors that pays annual interest of a given amount and at maturity pays back the original purchase price. The original purchase price.

What is an accurate description of money market instruments?

A variety of securities, such as short-term Treasury securities (such as T-bills), certificates of deposit (CDs), commercial paper, repurchase agreements (repos), and money market mutual funds that invest in these securities make up the money market.

Is it a certificate of deposit security?

A fixed-term investment or certificate of deposit won't deplete your capital because of market volatility. It is a safe financial vehicle with a guaranteed payout at maturity, similar to regular insurance. The money you deposit into your CD will grow steadily, so there is no possibility of losing any of it.

Learn more about the certificate of deposit: brainly.com/question/27240565

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The correct question is:

Choose the correct description for the following money market instrument.

Upper A certificate of deposit is a certificate of deposit is​:

A.

a short dash term debt instrument issued by large banks and well dash known corporations. A short-term debt instrument issued by large banks and well-known corporations. nothing

B.

an overnight loan between banks.an overnight loan between banks.

C.

a debt instrument sold by a bank to depositors that pays annual interest on a given amount and a maturity pays back debt instrument sold by a bank to depositors that pays annual interest on a given amount and at maturity pays back the original purchase price. the original purchase price.

D.

a short dash term money market instrument issued primarily by banks and funded from corporations and a short-term money market instrument issued primarily by banks and funded from corporations and other banks through loans in which Treasury bills serve as collateral comma with an explicit agreement to pay off the debt other banks through loans in which Treasury bills serve as collateral, with an explicit agreement to pay off the debt shortly.

8 0
2 years ago
Sally is in the business of purchasing accounts receivable. Last year, Sally purchased an account receivable with a face value o
marusya05 [52]

Answer:

Sally’s basis in the Account Receivable is $60,000

She has a bad debt deduction of $0. There is no Bad debt deduction for Sally. Rather she made a profit on the transaction.

Explanation:

The Account Receivable can be defined as a Debt Instruments. Debt instruments in accounting are valued at Lower of Cost or Net Realizable Value.  

Cost is the amount of cash or its equivalent that was expended to obtain an asset. The cost of this Account Receivable therefore is 60,000

Net realizable value (NRV) is the value that can be realized from the sale of an asset. Net Realizable value of the Account Receivable therefore is 80,000.

Therefore the value to be utilized as the value of the Account Receivable 60,000.

Below is the accounting entries to record the transaction and recognized profit.

For the Face Value of the Debt    

Debit: Account Receivable Account(Debtors)    60,000.00    

Credit: Account Receivable Purchase Account      60,000.00  

     

For the payment of the A/R    

Debit: Account Receivable Purchase Account    60,000.00    

Credit: Bank      60,000.00  

     

For the settlement received on the A/R    

Debit: Bank    65,000.00    

Credit: Account Receivable Account(Debtors)       60,000.00  

Credit: Profit & Loss        5,000.00  

8 0
3 years ago
What is a downside of receiving a tax<br> refund?
Dmitry [639]

Answer:

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Explanation:

you're essentially giving the government a free loan with no interest.

4 0
2 years ago
The employees of Pi's Pizza, a local pizza restaurant, feel that the owners and managers really try to follow the ethical polici
vfiekz [6]

Answer:

c. ethical climate.

Explanation:

<em>Ethical Climate is the moral atmosphere that domains and is practiced by a company in a work environment. </em>

I hope you find this information useful and interesting! Good luck!

6 0
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viktelen [127]
The principle of mercantilism views trade as a zero-sum game. 

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Zero-sum is describing a trade where one side of the trade benefits, but the other does not. 
4 0
3 years ago
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