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Paha777 [63]
3 years ago
9

Thayer Farms stock has a beta of 1.38. The risk-free rate of return is 3.87 percent, the inflation rate is 3.93 percent, and the

market risk premium is 9.03 percent. What is the expected rate of return on this stock?A. 8.35 percent B. 9.01 percent C.10.23 percent D.13.21 percent E. 13.73 percent
Business
1 answer:
Rasek [7]3 years ago
3 0

Answer:

Cost of Equity  16.33%

Explanation:

We solve for this using CAMP:

Ke= r_f + \beta (r_m-r_f)

risk free = 0.0387

premium market = (market rate - risk free) 0.0903

beta(non diversifiable risk) = 1.38

Ke= 0.0387 + 1.38 (0.0903)

Ke 0.16331 = 16.33%

We are given with the risk free rate of return and the market premium already so we just need to plug into the formula to solve for the expected return on the stock.

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Treasury bills are paying a 4% rate of return. A risk-averse investor with a risk aversion of A = 3 should invest entirely in a
Tomtit [17]

Answer:

Answer is 12.64%. Therefore,

Treasury bills are paying a 4% rate of return. A risk-averse investor with a risk aversion of A = 3 should invest entirely in a risky portfolio with a standard deviation of 24% only if the risky portfolio's expected return is at least 12.64%.

Refer below for the explanation.

Explanation:

E - 4%= 0.5(3)(24%)2

E=12.64%

7 0
3 years ago
Read 2 more answers
Any actions a firm takes that have the effect of reducing the level of rivalry in an industry that also do not require firms in
Elena L [17]

Answer:

tacit cooperation is the correct answer.

Explanation:

3 0
3 years ago
If you wish to enter the field of soil and
faltersainse [42]

4 year college degree is the minimum educational goal to attain if one wish to enter the field of soil and forest conservation.

The 4 year college degree is tantamount to the Bachelor degree achieved from University, college etc.

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Therefore, the Option C is correct.

Read more about forestry

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6 0
3 years ago
Last year Lawn Corporation reported sales of $115,000 on its income statement. During the year, accounts receivable decreased by
julia-pushkina [17]

Answer:

$125,000

Explanation:

Particulars                                                     Amount

Sales revenue                                            $115,000

Add: Accounts receivable decrease        <u>$10,000</u>

Cash Receipt from customers                 <u>$125,000</u>

The sales revenue adjusted to a cash basis for the year is $125,000.

4 0
3 years ago
Carter Corporation made sales of $ 825 million during 2018. Of this​ amount, Carter collected cash for $ 710 million. The​ compa
salantis [7]

Answer:

Part (a) The net income of carter is $115 million.

Part (b) The closing cash balance at the end of year is $360.

Explanation:

Part (a) Net Income Computation:

Sales                                     $825

Cost of goods sold             <u>(</u><u>$290</u><u>)</u>

Gross Profit                          $535

Other Expenses                  <u>(</u><u>$425</u><u>)</u>

Net income                          $115 Million

Part (b) The cash balance of  Carter is not dependent on non cash flows. So the cash transactions would be considered here for cash balance computation.

Opening Cash position               $290

Collection from Sales                  $710

Inventory Invoices paid              ($350)

For  Everything                           <u>($290)</u>

Closing Cash balance                 $360

4 0
3 years ago
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