All categories

4 years ago

What happens to most projects' value under the CAPM if there is a sudden increase to its market-beta

Business

1 answer:

Nana76 [90]4 years ago

5 0

Answer:

Its value increases

Explanation:

Here are the options to this question :

its value decreases

Its value increases

Its value stays the same

According to the CAPM ,

expected return of an asset = risk free rate + (beta x risk premium)

If the beta increases, the expected return of the asset increases and the value of the asset increases

You might be interested in

On March 31, Higgins Repair Service extended an offer of $415,000 for land that had been priced for sale at $460,000. On April 1

Arisa [49]

Answer:

The correct answer to the following question is $437,500.

Explanation:

In their books Higgins Repair service should record the value of the land as $437,500, no matter offer the made and they offer receive for selling the land. They made a deal with seller on April 15 , to buy the land for $437,500 and as per the cost concept or principle in accounting , an asset should be recorded in the books of account at the amount paid for acquiring it and this amount would not change in situations of inflation or change in market value.

8 0

3 years ago

Goods X and Y are complements. If the price of Good X decreases, this will cause a movement ________ the demand curve for Good X

notsponge [240]

Answer:

along, outward

Explanation:

Complementary goods are goods that complement each other in demand. An increase in quantity demanded of one product leads to increase in sand of the other.

For example tea and sugar. Since tea and sugar are taken together, an increase in demand for tea should result in increased demand for sugar also.

So a decrease in X above will lead to increased demand for X which also increase demand for its complement (Y).

An outward shift in Y means that at all prices Y's demand has increased (demand shift outward).

8 0

4 years ago

When preparing the operating budgets for a manufacturing company, the manufacturing overhead budget ________. only includes vari

Stells [14]

When preparing the operating budgets for a manufacturing company, the manufacturing overhead budget includes costs that are projected by the cost accountant and the production manager. It contains the all <span>manufacturing costs and expenses, except the direct materials (raw materials) and direct labor. </span>

4 0

3 years ago

Accounts Randall Company estimates its bad debts expense by aging its accounts receivable and applying percentages to various ag

Crazy boy [7]

Answer:

Explanation:

The journal entry will be:

Debit: Bad debt expense $2500

Credit: Allowance for doubtful $2500

Then, we will calculate the net amount of account receivable that should be included in current assets which will be:

Account receivable = $128000

Less: Allowance for doubtful = $500 + $2500 = $3000

Net amount of account receivable = $125000

8 0

3 years ago

Kaiwan, Inc., a calendar year S corporation, is partly owned by Sharrod, whose beginning stock basis is $107,500. During the yea

Anton [14]

Answer: a)$59,125 (loss)

b) $5,913 (loss)

c) $0

Explanation:

a. In calculating Sharrod's deductible loss, we can use the following formula,

= Beginning Stock + Long Term Capital Gain - Cash distribution

Calculated that would be,

= 107,500 + 16,125 - 64,500

= $59,125

Sharrod's deductible loss is $59,125

b. For Sharrod's suspended loss, the formula we will use is like in a but with an added subtraction.

= Beginning Stock + Long Term Capital Gain - Cash distribution - ordinary loss

= 107,500 + 16,125 - 64,500 - 65,038

= -$5,913

Sharrod's suspended loss is therefore $5,913

c) Sharrod's new basis is now therefore 0.

If you need any more information, do comment. Cheers.

8 0

4 years ago