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suter [353]
3 years ago
15

If the CAPM is used to estimate the cost of equity capital, the expected excess market return is equal to the:

Business
1 answer:
OLga [1]3 years ago
5 0

Answer:

B. difference between the return on the market and the risk-free rate

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 × (Market rate of return - Risk-free rate of return)

where,

(Market rate of return - Risk-free rate of return)  = Market risk premium

And all things remain constant.

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Suppose you bought 100 shares of IBM at $200 per share. What is the maximum loss if you place a stop-loss order at $165
Lynna [10]

Answer:

$3,500

Explanation:

Placing a stop-loss order at $165 means that the last amount that the stock traded, it had a price of $165 per share.

Based on that, it is evident that each stock has lost $35 when compared to the price at which the stop-loss order was placed and the initial cost per share of $200.

Loss per share=$200-$165=$35

The loss incurred on 100 shares of IBM=loss per share*number of shares owned

The loss incurred on 100 shares of IBM=$35*100

The loss incurred on 100 shares of IBM=$3,500

4 0
3 years ago
While the role of the state in a command economy is to be __________, in a market economy the state's role is to be __________?
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3 0
3 years ago
Prices of products are often higher in a foreign country than the home country due to transportation charges, taxes, tariffs, an
Genrish500 [490]

Answer:

Option E Price Escalation

Explanation:

Price Escalation is when the government imposes additional taxes on the product which is exported to their country, this makes the product expensive and the customer as a result don't buys that product. Such type of increases in prices are known as price escalation.

7 0
3 years ago
Which concurrent testing method helps calculate the visibility of an outdoor advertisement?
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I think it would be a
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3 years ago
A 30-year maturity bond making annual coupon payments with a coupon rate of 12% has (Macauley) duration of 11.54 years and conve
dsp73

The price of the bond if the yield to maturity falls to 7%, based on the period and amount will be $1,620.45.

<h3>What is the price of the bond at 7%?</h3>

We shall assume that the bond has a face value of $1,000.

The coupon is:

= 12% x 1,000

= $120

The price is:
= (Coupon x Present value interest factor of annuity, 30 years, 7%) + Face value of bond / ( 1 + rate) ^ number of periods

= (120 x 12.409) + (1,000 / (1 + 7%)³⁰)

= $1,620.45

Find out more on bond pricing at brainly.com/question/25596583.

7 0
2 years ago
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