Answer:
7%
Explanation:
Data provided as per the question
Risk free rate = 0.4
Beta = 0.7
The computation of alpha of the stock is shown below:-
Expected return = Risk free rate + (Beta × Market rate of return)
Expected return = 0.4 + (0.7 × Market rate of return)
= 0.7
or 7%
Therefore for computing the alpha of the stock, we have applied the above formula.
Answer:
e. Company Heidee has a higher ROE than Company Leaudy.
Explanation:
Return on equity measures how well the management of a business uses owner's equity to get returns. It is calculated by dividing net income by owner's equity.
That is
ROE= Net Income ÷ Owner's equity
Considering the accounting equation
Asset= Liability + Owner equity
Owner equity= Asset - Liability
From the equation when a company that take on more debt owner's equity will reduce.
The effect of reduction in owner's equity on Return on Equity is that it will increase the ratio, since owner's equity is the denominator.
In this scenario both companies have the same profit margin so if company Heidee has higher debt ratio it follows that it also has a higher ROE than Company Leaudy
Answer:
Real estate short sale
Explanation:
Real estate is defined as a piece of land and any attached property that is constructed on it.
In real estate business a real estate short sale occurs when the person that owns a property decides to sell the property at a price that is less than the amount on the mortgage.
This usually occurs as a result of financial distress of the owner.
In the given scenario the property has a mortgage value of $150,000 and down payment of $30,000 has been made.
The mortgage amount is now $150,000 - $30,000 = $120,000
However they now sell the property for $115,000 which is less than the remaining mortgage value of $120,000.
This is and example of real estate short sale.
1,2,3 i believe those are correct