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Svetlanka [38]
3 years ago
13

Consider the single-index model. The alpha of a stock is 0%. The return on the market index is 16%. The risk-free rate of return

is 5%. The stock earns a return that exceeds the risk-free rate by 11%, and there are no firm-specific events affecting the stock performance. The β of the stock is
Business
1 answer:
Natalka [10]3 years ago
3 0

Answer:

β of the stock = 1

Explanation:

Given:

α of a stock = 0%

Return on the market index = 16%

Risk-free rate of return  = 5%

Required rate  = 11% + 5% = 16%

β of the stock = ?

Computation of β of the stock:

Required rate = Risk-free rate of return + [β (Return on the market index - Risk-free rate of return)]

16% = 5% + [β (16% - 5%)]

16% - 5% = β (16% - 5%)

11% = [β (16% - 5%)

11% = [β (11%)

β of the stock = 1

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Answer:

Sumner's has a loss of $-7750 from the sale of the equipment

Explanation:

Solution

Given that:

We compute the amount  of profit and loss, few steps will be taken which is given below:

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Book value = purchase price - depreciation claimed

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Step 2: we calculate the amount of Sumner's gain or loss which is shown below:

The gain (loss) is = the value (sale) - book value

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3 years ago
As a manager seeks to develop her leadership skills, she should be aware that:
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Answer:

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Right click the last data point and select "Set as Total"

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Right click the last data point and select "Set as Total".

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8 0
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