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
tino4ka555 [31]
3 years ago
5

Investors expect the market rate of return this year to be 15.00%. The expected rate of return on a stock with a beta of 1.3 is

currently 19.50%. If the market return this year turns out to be 12.80%, how would you revise your expectation of the rate of return on the stock? (Do not round intermediate calculations. Round your answer to 1 decimal place.)
Business
1 answer:
belka [17]3 years ago
6 0

Answer:

Expectation of rate of return on the stock is  16.64%

Explanation:

Ke=Rf+beta(Mrp-Rf)

Rf is unknown

Mrp is 15%

Ke is 19.5%

beta is 1.3

19.5%=Rf+1.3(15%-Rf)

19.5%=Rf+19.5%-1.3Rf

19-5%-19.5%=Rf-1.3Rf

0%=-0.3Rf

Rf=0%/-0.3

Rf=0%

By substituting the value of Rf in the original formula ,we can now calculate Ke when Mrp is 12.80%,beta is 1.3 Rf is 0%

Ke=0%+1.3(12.80%-0%)

Ke=0%+16.64%+0%

Ke=16.64%

You might be interested in
As sales manager, Joe Batista was given the following static budget report for selling expenses in the Clothing Department of So
julsineya [31]

Answer:

SORIA COMPANY

Clothing Department

Flexible Budget Report

For the Month Ended October 31, 2017

See attachment.

In flexible budgeting, the fixed costs are assumed to be constant within the relevant range.  Only the variable costs are flexed.

Workings:

1. Sales Commission = $1,680/8,400 x 9,000 = $1,800

2. Advertising = $1,176/8400 x 9,000 = $1,260

3. Travel Expense = $4,032/8,400 x 9,000 = $4,320

4. Free Samples = $1,680/8,400 x 9,000 = $1,800

Explanation:

The flexible budget is one that flexes the activity level or volume in order to recognize changes that may arise.  This changes the base volume of the variable costs.

To achieve this, the value under the static budget is divided by the static budget volume and multiplied by the flexed budget volume(s).

In this case, when the budget was flexed from the static sales volume of 8,400 to 9,000 in accordance with the actual volume achieved, the favorable value was increased from $1,188 to $1,800 more than 50% increase.

The implication is that a flexible budget helps to better evaluate performance than its opposite, the static budget.

Download xlsx
8 0
3 years ago
Camaro GTO Torino Cash $ 2,000 $ 110 $ 1,000 Short-term investments 50 0 580 Current receivables 350 470 700 Inventory 2,600 2,4
SSSSS [86.1K]

Answer:

<u>Current Ratio :</u>

Camaro = 2.6

GTO = 3.5

Torino = 1.95

<u>Acid Test Ratio :</u>

Camaro = 1.3

GTO = 1.08

Torino = 0.84

Explanation:

The current ratio and acid-test ratio for each of the following separate cases will be as follows

Current ratio = Current Assets ÷ Current Liabilities

Camaro = 2.6

GTO = 3.5

Torino = 1.95

Acid Test Ratio = (Current Assets - Inventory) ÷ Current Liabilities

Camaro = 1.3

GTO = 1.08

Torino = 0.84

8 0
3 years ago
The new-product process starts with new-product strategy development. Place the steps that follow this one in order. (In other w
nalin [4]

Answer:

1. New-product strategy development.

2. Idea generation.

3. Screening and evaluation.

4. Business analysis.

5. Development.

6. Market testing.

7. Commercialization.

Explanation:

New product strategy is the first one as described and the remaining are briefed below:

Idea Generation: This steps creates the idea for how the product shall be created.

Screening and evaluation: This helps in evaluating the idea generated and comparing it with the practical manner.

Business Analysis aims at analyzing the business prospect of the new product.

Development is done once all of the above steps are in affirmation.

Market testing is done after the development about the market captured by the product or to be captured.

Commercialization basically aims at the proper introduction of the product in the market.

8 0
3 years ago
What would be the net effect of the government increasing the taxes by $10 billion at the same time that it decreased spending b
vazorg [7]

Answer:

a

Explanation:

4 0
2 years ago
The following is a trial balance of Barnhart Company as December 31, Year 1: Account Title: Debit Credit Cash 12,500 Accounts Re
Tanzania [10]

Answer:

The total amount of assets is 15,750.

Explanation:

Reproducing the trial balance below for clarity:

Account Title                  Debit           Credit

Cash                                12,500

Accounts Receivable     3,250

Accounts Payable                               2,800

Common Stock                                   6,600

Retained Earnings                              4,500

Service Revenue                                7,450

Operating Expenses       5,100

Dividends                         500

Total                                21,350         21,350

Calculation of Total Assets:

Total assets = Cash + Accounts Receivable

                    = 12,500 + 3,250

                    = 15,750

Note that among the given accounts, accounts cash and accounts receivable are assets; accounts payable is a liability; common stock and retained earnings are part of the capital; service revenue is a form of revenue; while operating expenses and dividends are expenses.

7 0
3 years ago
Other questions:
  • After several years with the publishing house that Jessica started at after college, she has been promoted to manager of the fic
    11·1 answer
  • As time goes on and stresses increase, marital satisfaction goes down. For many couples, the reason for this drop is having chil
    11·1 answer
  • The​ company, suppliers,​ distributors, and customers who open double quote partnerclose double quote with one another to improv
    7·1 answer
  • All of the following factors will affect the market rent on an office building except:
    11·1 answer
  • Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $305,000, vari
    11·1 answer
  • Ruth is taking ASVAB exam. Match each question with the correct section.
    15·2 answers
  • Your project to obtain charitable donations is now 30 days into a planned 40 day project. The project is divided into 3 activiti
    8·1 answer
  • 1. What is public relations? Give an example of a public relations activity.
    7·1 answer
  • malcom is starting to turn down overtime opportunities, he has developed a personal reading list that he is working through, and
    12·1 answer
  • if both producers decided to trade with each other to stock their toy stores, the terms of trade that would benefit both geppett
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!