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
Tanzania [10]
3 years ago
14

Over a certain period, large-company stocks had an average return of 12.14 percent, the average risk-free rate was 2.49 percent,

and small-company stocks averaged 17.09 percent. What was the risk premium on small-company stocks for this period?
a. 9.93%
b. 19.39%
c. 14.81%
d. 11.85%
e. 4.88%
Business
1 answer:
tatyana61 [14]3 years ago
6 0

Answer:

14.6 percent

Explanation:

Data provided in the question

The average return of large-company stock = 12.14 percent

The average risk-free rate of return = 2.49 percent

The average return of small-company stock = 17.09 percent

By considering the above information, the risk premium is  

= Average return of small-company stock - Average risk-free rate of return

= 17.09 percent - 2.49 percent  

= 14.6 percent

This is the answer but the same is not provided in the given options

We simply deduct the risk-free rate of return from the market return so that the risk premium could come

You might be interested in
Company A has a beta of 0.70, while Company B's beta is 1.45. The required return on the stock market is 11.00%, and the risk-fr
stira [4]

Answer:

company B's cost of equity is 14.0375% - 8.975% = 5.0625% higher than company A's cost of equity

Explanation:

cost of equity = risk free rate + (beta x market premium)

risk free rate = 4.25%

market premium = market return - risk free rate = 11% - 4.25% = 6.75%

Company A's cost of equity = 4.25% + (0.7 x 6.75%) = 8.975%

Company B's cost of equity = 4.25% x (1.45 x 6.75%) = 14.0375%

this means that company B's cost of equity is 14.0375% - 8.975% = 5.0625% higher than company A's cost of equity.

8 0
3 years ago
True or false?
valentina_108 [34]
True total utility always decreases when marginal utility is present
6 0
3 years ago
explain prefix increment operator vs. postfix increment operator, give an example in Java code, explain what's happening at the
AveGali [126]
<h2>Pre-Increment increments the value immediately, Post increment increments the value only after executing the entire line.</h2>

Explanation:

class PrePostIncOperator {

   public static void main(String[] args){

         int x=5;    

         System.out.println(x++);          

         System.out.println("\n"+ ++x);    

        }

   }

Let us understand the program.

int x = 5 => Initializes the value of 5 to the variable x

System.out.println(x++);  This is the post increment operator. The value of x gets incremented only after printing the value. That is first System.out.println(x) will be executed and then the increment operator takes place once it finds the ";" that is the end of the statement. The memory which holds the value of x is changed only after executing the statement.

System.out.println("\n"+ ++x);     Here the value gets incremented and immediately assigns to the memory.

8 0
3 years ago
There is often a trademinusoff between A. limited and unlimited resources. B. economic efficiency and economic equity. C. volunt
DedPeter [7]

Answer:

B. economic efficiency and economic equity.

Explanation:

These two systems economic efficiency and economic equity are particularly been seen or used as a criteria that required in system of allocation. Efficiency here are known to be trade off which are particularly affected by a lot different policies. An example is seen between equity and efficiency can be explained with government environmental policy. Whoever benefits most in natural resources exploitation and at the cost, is a policy question that needs to be answered. The effect from these exploitation fall on the masses directly when carefully observed.

3 0
3 years ago
Jeff has a $2,000 salary and a $100 dividend income this month. This month Jeff has rent and utilities of $800 and he spent $350
Gnoma [55]

Answer:

Net cash flow is $850

Explanation:

Net cash flow =Monthly Cash inflows  - Monthly Cash outflows

                       = Salary + Dividend Income - expenses

                       = $2,000 + $100 - $800 - $350 - $100

                       = $850

Therefore, Jeff's net cash flow for this month is $850.

3 0
3 years ago
Other questions:
  • One of the most controversial aspects of the ada is the provision that requires employers to make reasonable accommodations for
    14·1 answer
  • Which of the following is not a principal dimension of a servicescape?
    9·1 answer
  • If you cause a car accident which type of insurance will require you to pay the least out of pocket
    14·2 answers
  • According to federal regulations research is eligible for exemption if
    10·1 answer
  • Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years, because
    6·2 answers
  • Brief Exercise 8-06 The cash register tape for Bluestem Industries reported sales of $6,871.50. Record the journal entry that wo
    6·1 answer
  • [The following information applies to the questions displayed below.] On April 1, 2016, Cyclone's Backhoe Co. purchases a trench
    10·1 answer
  • Select the correct answer.
    8·1 answer
  • The amount of joint costs allocated to product DBB-1 using the sales value at split-off method is (calculate all ratios and perc
    10·1 answer
  • On January 1, 2018, the Highlands Company began construction on a new manufacturing facility for its own use. The building was c
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!