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Andru [333]
3 years ago
14

Which of the following statements about the capital asset pricing model (CAPM), which is the "father" of the security market lin

e (SML), is (are) most correct?a. The CAPM is based on a restrictive set of assumptions.b. It has not been empirically verified. In general, its inputs are difficult to estimate, particularly E(g).c. Despite its deficiencies, it provides investors with a rational way of thinking about required rates of return.d. All of the above responses are correct.
Business
1 answer:
HACTEHA [7]3 years ago
7 0

Answer:

(d) All of the above responses are correct

Explanation:

The Capital asset pricing model (CAPM) helps in calculation of expected rate of return by an investor which is dependent upon risk premium and beta.

Beta refers to sensitivity of return from stock with respect to the market return.

Risk premium refers to the additional rate of return which an investor must be provided so as to compensate him for additional risk he assumes.

ER = Rf + β (Rm- Rf)

ER= Expected Rate Of Return

Rf= Risk Free Rate of Return

Rm= Return from market

β = sensitivity index of security return to market return

Security Market Line (SML) is a graphic representation of CAPM.

Thus,  (d) is the correct option

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Traffic patterns in a particular room arrangement cannot be predicted ahead of time; instead, teachers must simply wait until st
madreJ [45]

Answer:

False

Explanation:

Traffic patterns an be predicted in ahead of time and as such teachers can identify problem areas as well as rearrange before students arrive. This also helps in teacher time management as through tthe prediction can save time.

Cheers

7 0
3 years ago
Motorola's worldwide advertising campaign for cell phones is an attempt to provide a common theme and presentation in all market
larisa86 [58]

Answer: True

Explanation: <u><em>The scenario given in the question is an example of  global advertising campaign.</em></u>

Global advertising can be referred to as advertising on global scale unification or captivating marketable benefit of worldwide operational variances, similarities and chances in order to accomplish global aims. It is also known as a method where similar universal message is functional at a global scale<u><em>.</em></u>

4 0
3 years ago
A company pays its employees $4,250 each Friday, which amounts to $850 per day for the five-day workweek that begins on Monday.
BartSMP [9]

Answer:

$3,400

Explanation:

Out of five day workweek, accounting period ends on Thursday which indicates that employees work only for 4 days. Therefore, salaries are earned only for 4 working days and unpaid at the end of the accounting period

Salaries earned but unpaid= 4 working days * $850 per day = $3,400

Hence, salaries earned but unpaid at the end of the account period is $3,400

5 0
3 years ago
In what way does the kettle falls five case illustrate a weakness of a federal system? choose the best answer.
almond37 [142]

The kettle falls five case illustrate a weakness of a federal system in such a way that f<span>ederalism limits political power and that it depends on compliance of state.</span>
<span>The federal system also aggravates the efficiency in awareness of Policies and its implementation. The kettle falls five case was very surprising.</span>

6 0
3 years ago
Flounder Inc. issues 500 shares of $10 par value common stock and 100 shares of $100 par value preferred stock for a lump sum of
ipn [44]

Answer:

a.

Journal Entries

Dr. Cash ___________________$104,000

Cr. Common Stock ___________$5,000

Cr. Preferred stock ___________$10,000

Cr. Paid in capital Common Stock $78,200

Cr. Paid in capital Preferred stock $10,800

b.

Dr. Cash ___________________$104,000

Cr. Common Stock ___________$5,000

Cr. Preferred stock ___________$10,000

Cr. Paid in capital Common Stock $84,000

Cr. Paid in capital Preferred stock $5,000

Explanation:

a.

First, we need to calculate the fair value of each type of shares using the following formula

Fair value  = Numbers of shares x Fair value per share

Fair Value of Common Share = 500 shares x $164 per share = $82,000

Fair value of preferred share = 100 shares x $205 per share = $20,500

Total value of shares = $82,000 + $20,500 = $102,500

Now allocate the Value of $104,000 bases on the fair value

Allocation to

Common stock = $104,000 x $82,000 / $102,500 = $83,200

Preferred stock = $104,000 x $20,500 / $102,500 = $20,800

Now calculate the par values

Par Values

Common stock = 500 shares x $10 = $5,000

Preferred stock = 100 shares x $100 = $10,000

Now calculate the additional paid-in capital

Additional paid-in capital

Common stock = $83,200 - $5,000 = $78,200

Preferred stock = $20,800 - $10,000 = $10,800

b,

Value of common stock = $178 per share x 500 shares = $89,000

Additional paid in capital

Common stock = $89,000 - $5,000 = $84,000

Preferred stock = $104,000 - $89,000 - $10,000 = $10,000

6 0
2 years ago
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