Assit the new potential customers and discuss more
The correct answer is A) Compensating managers with shares of stock that must be held for 3 years before the shares can be sold.
The option that is most apt to align management's priorities with shareholders' interests is "Compensating managers with shares of stock that must be held for 3 years before the shares can be sold."
Compensation is one of the most important ways to motivate managers to be productive and deal with all kinds of investors. They have a big responsability managing the investor's portfolio so their work must be compensated proportionally. Money is not always the only way to offer interesting compensation. That is why stocks are included in the compensation package, such as the nonqualified stock options and incentive stock options.
Answer: 4.2%
Explanation:
Beta is a measure of sensitivity of a stock in that it measures how the stock reacts to a movement in market return. The Beta of the Market is 1.
If a Stock's Beta is 2, this means that if expected market return increases by 1%, the stock's expected return will increase by 2%. If a Stock's beta is 0.5 then if the expected return on the market increases by 1%, the stock's expected return will increase by 0.5%.
In this case the expected return on the market increases by 6% so the expected return on Static Corporation should increase by;
= 0.7 * 6%
= 4.2%
Answer:
Unlevered beta = 0.53
Explanation:
<em>Beta is a measure of systematic risk. Systematic risk is further divided into business and financial.</em>
<em>Business risk and financial risk. Business risk is that associated with the nature of the business operations that causes variability in the operating income of the business.</em>
This is measured by the unlevered beta where the company has no debt finance.
Financial risk, on the other hand, is associated with use of debt finance . A company that uses a form of debt would face such risk . The systematic risk of such business would be measured using the levered beta.
The formula below shows the relationship:
βa = βe × Ve/ (Ve + Vd(1-T) )
βa -Unlevered beta
βe - Levered beta
Ve- Equity weight
Vd- Debt weight
T- Tax rate
DATA
βe- 0.9
βa- ?
Ve- 1
Vd- 1
T- 0.3
βa = 0.9 × 1/(1 + 1×(1-0.3)=0.529
βa - 0.53
Unlevered beta = 0.53
