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
valina [46]
3 years ago
12

Suppose you observe the following situation: Security Beta Expected Return A 1.16 .1137 B .92 .0984 Assume these securities are

correctly priced. Based on the CAPM, what is the return on the market
Business
1 answer:
lyudmila [28]3 years ago
3 0

Answer: 10.35%

Explanation:

The Capital Asset Pricing Model is used to calculate the expected return of a security with the expression

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

( Market return - risk free rate) is also known as the market premium and can be calculated by;

= \frac{Expected return on A - Expected return on B}{Beta for A - Beta for B}

= \frac{0.1137 - 0.0934}{1.16 - 0.92}

= 0.0153/0.24

= 6.375%

= 6.38%

Expected return A = Risk free rate + Beta A ( Market return - risk free rate)

0.1137 = Risk free rate + 1.16 (6.38%)

Risk free rate = 0.1137 - 1.16(6.38%)

Risk free rate = 3.97%

Market Expected return = Market Risk Premium + risk free rate

= 6.38% + 3.97%

= 10.35%

You might be interested in
Which of the following is not a ratio to assess a firm's liquidity?a. Current Ratiob. Debt ratioc. Quick Ratiod. All of the abov
Mandarinka [93]

Answer:

b. Debt ratio

Explanation:

The liquidity ratio includes the current ratio, quick ratio, etc

where,  

Current ratio = Total Current assets ÷ total current liabilities

And, Quick ratio = Quick assets ÷ total current liabilities  

where,  

Quick assets = Cash and cash equivalents + short-term investments + Accounts receivable (net)  

These two ratios check the liquidity of the business organization whereas debt ratio shows a relationship between the total liabilities and the total assets. It checks the leverage of the firm whether it is capable to repay the borrowed amount or not

Hence, option b is correct

4 0
3 years ago
When does a corporation record an increase in Dividends Payable?
Gnoma [55]

Answer:

B. On the declaration date

Explanation:

Dividend payable are usually advised by management but must be ratified by the shareholders (usually in the annual general meeting) for such to be come recognizable in the books. The date of ratification is the declaration date

As such a corporation record an increase in Dividends Payable on the declaration date.

The right option is B. On the declaration date

4 0
3 years ago
Which is the purpose of the U.S. treasury department?​
tatuchka [14]

Answer:

The Department of the Treasury manages Federal finances by collecting taxes and paying bills and by managing currency, government accounts and public debt. The Department of the Treasury also enforces finance and tax laws.

Give me brainliest answer pls

5 0
2 years ago
Bonds that are backed solely by the general credit of the corporation issuing them are called _______ bonds.
babymother [125]
Unsecured bonds, these bonds are also called debenture bonds.
I hope this helps.
3 0
3 years ago
Meno is 64 years old. Although continuously faced with considerable stress and difficulty in his life, he always displays an opt
sweet-ann [11.9K]

Answer:

B. probably live longer than those without such positive attitudes.

Explanation:

An attitude is an entity or principle which defines a person's personality and thoughts. It helps a person building an emotional outlook altogether. Attitude can be both positive and negative. It affects the thought, emotions, and feelings of the person. It depends on the attitude how a person handles a situation. In the case of Meno, it is because of his positive attitude that he will be able to live longer and happier than other people.

3 0
3 years ago
Other questions:
  • Danielle is a 74-year-old widow, lives alone in the home she has had for over 40 years, and has become something of a packrat. s
    14·1 answer
  • Peanuts and soy products are dangerous for people with what condition?
    13·1 answer
  • Whether you operate your business from a small office at home or in a large plant environment, it's still referred to as your
    15·2 answers
  • Adrian Corp. sells goods on account for $100,000 on May 1. On May 15, the customer returns $40,000 of the merchandise. The custo
    8·1 answer
  • The person or group most responsible for a product meeting is:
    9·2 answers
  • A study conducted by Alberto Alesina and Lawrence Summers concluded that countries with​ ________ had lower inflation rates than
    9·1 answer
  • Satisfaction is one of the first and most crucial steps of the staircase of motivation because motivation provides comfort to in
    8·1 answer
  • Irene wants to make a copy of a housing design from a magazine. Which tool does she require? A.
    12·1 answer
  • Which statement best summarizes the information on these graphs? many bolivians are farmers, but the agriculture sector does not
    8·1 answer
  • At a profit-maximizing output level, marginal revenue minus:_____
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!