1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Kaylis [27]
3 years ago
11

Aluminum maker Alcoa has a beta of about 1.85​, whereas Hormel Foods has a beta of 0.39. If the expected excess return of the ma

rket portfolio is 3​%, which of these firms has a higher equity cost of​ capital, and how much higher is​ it? g
Business
1 answer:
Nady [450]3 years ago
8 0

Answer and Explanation:

The computation is shown below:

As we know that

According to the Capital Asset Pricing Model (CAPM) formula

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

And, the market rate of return - Risk-free rate of return is also known as the market risk premium

As we can see that the Alcoa contains high beta as compared to Hormel Foods so the Alcoa has a higher equity cost of capital

And, the higher rate is

= (Excess return of the market) × (Alcoa beta - Hormel foods beta)

= (3%) × (1.85 - 0.39)

= 3% × 1.46

= 4.38%

You might be interested in
Jason is shopping at Hollister. Hollister has a sale: spend $100 saves 10%. If Jason buys clothes that costs $100, how much will
densk [106]

Answer:

$90

Explanation:

Hollister has an offer of 10%  savings for every purchase.

Jason buys clothes for $100. His savings will be 10% of $100

=10/100 x100

=0.1 x 100

=$10

Jason will pay

=$100 - $10

=$90

Jason will pay $90

8 0
3 years ago
Inbound marketing represents a fundamental shift in the way that organizations operate because it is ______-centric.
Natasha2012 [34]
<span>Inbound marketing represents a fundamental shift in the way that organizations operate because it is marketer-centric. This is an unconventional approach of systems since the usual ones is allowing the customers to be put first or customer-centric kind of approach. This kind builds the best relationship you can offer with the customer.</span>
4 0
3 years ago
A merger where one company purchases another as a way to reduce competition, is an example of a type of market activity that gov
DIA [1.3K]

Answer:

B) antitrust laws

Explanation:

Antitrust laws refer to the laws with respect to the competition and it is established by the U.S government. The motive of this to secure the consumers from that business practices who are dealing in predatory and if this law does not exist then the consumers would not gain i.e from the competition arise in the market place

Therefore according to the given situation, when the government passes the law against so this reflect the antitrust laws

6 0
3 years ago
Suppose Firm A has a supply curve of Upper Q Subscript Upper A Baseline equals negative 2 plus p and Firm B has a supply curve o
Sonja [21]

Answer:

The total supply can be found by adding individual supply functions as follows:

Qa+Qb = Q

Q = -2+p+0.5p

Q= -2+1.5p where p = $44 therefore;

Q= -2+1.5(44)

Q= 64

Total supply at p = $15

Q= -2+15(1.5)

Q= 20.5

8 0
3 years ago
Which is an example of a mandatory deduction on a pay stub?
Grace [21]

Answer:

Some mandatory payroll tax deductions that employers are required by law to withhold from an employee's paycheck include: Federal income tax withholding. Social Security & Medicare taxes – also known as FICA taxes.

~Its srishty~✿

3 0
2 years ago
Other questions:
  • Let’s suppose you (USA dealer) imported a product from German on Dec 1, 2018 at € 300, payable in 60 days. You sold the product
    13·1 answer
  • Phoenix, a popular coffee shop chain in North America, recently opened 400 stores to cater to its rapidly increasing number of p
    8·1 answer
  • Which statement best describes how an informational interview differs from a job interview
    7·2 answers
  • On January 1, 2013, Ameen Company purchased a building for $36 million. Ameen uses straight-line depreciation for financial stat
    10·1 answer
  • What should you do in order to make sure you fund the most important financial goals first?
    11·2 answers
  • Trial courts determine if a will is valid or not. O True O False​
    10·1 answer
  • The sarbanes-oxley act created the _____ to protect the interests of investors and further the public interest in the preparatio
    7·1 answer
  • The benefits of trade extend beyond simple exchange. For example, trade allows us to take advantage of _____, the reduction in c
    12·1 answer
  • Jenny owns a book company. It costs $10.00 to produce a new book and the company wants a 30% profit, so he charges $13.00 for th
    10·1 answer
  • In 2019, pastured eggs sold for more than twice the price of cage-free eggs and almost 5 times the price of conventional eggs, m
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!