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
Vikki [24]
3 years ago
6

Stock R has a beta of 1, Stock S has a beta of 0.45, the required return on an average stock is 9%, and the risk-free rate of re

turn is 3%. By how much does the required return on the riskier stock exceed the required return on the less risky stock? Round your answer to two decimal places.
Business
1 answer:
insens350 [35]3 years ago
4 0

Answer:

3.00%

Explanation:

Required return of a stock = Risk free rate of return + (average required return - Risk free rate of return) (Beta of the stock)

Required return of Stock R = 0.03 + [ (0.09 - 0.03) * 1)] = 0.09

Required return of Stock S = 0.03 + [ (0.09 - 0.03) * 0.45)] = 0.06

Difference = 0.09 - 0.06 = 0.03, or 3%

Therefore, the required return on the riskier stock will exceed the required return on the less risky stock by 3.00%.

You might be interested in
An annuity that goes on indefinitely is called a perpetuity. The payments of a perpetuity constitute a/an series. The equation i
Alborosie

Answer:

Present value of the security = $1,888.89

Explanation:

The annual dividend of $170 represents a perpetual income stream. The present value of a perpetuity is calculated as follows:

PresentValue=\frac{Coupon}{r}

where r =interest rate per annum that would be compounded for each year

Therefore, present value of the security = \frac{170}{0.09} = $1,888.89

4 0
3 years ago
Jhglijewbgijwebghrlfbejfrhfvhwrfh3vrhwrv344
vovikov84 [41]

Answer:

jhglijewbgijwebghrlfbejfrhfvhwrfh3vrhwrv344

6 0
3 years ago
Riley is a 50% partner in the RF Partnership and has an outside basis of $56,000 at the end of the year prior to any distributio
Savatey [412]

Answer:

The land basis will be $8,000 and partnership basis will be $42,000.

Explanation:

The outside basis at the end of the year is $56,000.

The cash basis is $6,000.

The fair value of land is $14,000.

The land basis to RF is $8000.

The partnership basis will be

=Outside basis-cash basis-land basis

=$(56,000-6,000-8,000)

=$42,000.

So, the land basis will be $8,000 and partnership basis will be $42,000.

5 0
3 years ago
When text is indented in an outline, what does that usually mean?
andrew11 [14]

Answer:

D

Explanation:

its is D because why not ight

3 0
3 years ago
Read 2 more answers
In a conversation between two parties, a statement like, "What I'm hearing you say . . ." is an example of:
dimaraw [331]
Communication involves both listening and speaking. When you say "What I'm hearing you say" is an example of reflective listening because you are trying to clarify the idea of what the other party is trying to imply. Then listener recaps the message using his own words and tries to give back the speakers idea to confirm if the idea has been understood. 
3 0
3 years ago
Other questions:
  • If the interest is compounded semiannually, look up on the chart half the rate and twice the years. If the interest is compounde
    9·1 answer
  • What branches or specializations concentrate their efforts and work on business, work and life satisfaction in psychology ?
    7·1 answer
  • With respect to competitive advantages, many see __________ as the most important asset that an organization can possess, as it
    6·1 answer
  • The account balances and income statement of Winfrey Towing Service on June 30, 2018, follow:
    10·1 answer
  • When it comes to saving money, what is a good rule of thumb
    12·2 answers
  • Perez Concrete Company pours concrete slabs for single-family dwellings. Lancing Construction Company, which operates outside Pe
    9·1 answer
  • If the required reserve ratio is 10 percent, currency in circulation is $400 billion, checkable deposits are $800 billion, and e
    13·1 answer
  • 2. Cash flows from __________ activities are the cash flows from transactions that affect the debt and equity of the company.
    9·1 answer
  • Mansfield Corporation purchased a new warehouse at the beginning of Year 1 for $ 1,000,000 . The expected life of the asset is 2
    10·1 answer
  • The time between the disabling event and the beginning of payments in your disability coverage is called:___________
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!