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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%.

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Sheffield’s Manufacturing Company can make 100 units of a necessary component part with the following costs: Direct Materials $1
larisa [96]

Answer:

Company Save  $37000 by Buying

Explanation:

given data

make component part = 100 units

Direct Materials = $122000

Direct Labor = 34000

Variable Overhead = 55000

Fixed Overhead = 30000

purchase the component = $200000

fixed costs = $4000

to find out

make or buy decision

solution

first we find here Total Cost for Making component part

total cost = Direct Materials + Direct Labor + Variable Overhead + Fixed Overhead ..............1

put here value

total cost for make =  $122000 + 34000  + 55000 + 30000

total cost for make = $241000

and

now we find here Total Cost for buying component part

total cost = Purchase Price + fixed costs   ............2

put here value we get

total cost for buying = $200000 +  $4000

total cost for buying  = $204000

so

we can say Company Save =  $241000 -  $204000   = $37000 by Buying

5 0
3 years ago
A company purchased a machine for $8,000, the estimated value of the equipment at the end of its 6-year useful life is $600. Com
vfiekz [6]

Explanation:

b) Double declining Balance

6 0
3 years ago
Read 2 more answers
What is purpose of public relations?
Elza [17]

Answer:

Explanation:

The aim of public relations by a company often is to persuade the public, investors, partners, employees, and other stakeholders to maintain a certain point of view about it, its leadership, products, or of political decisions.

5 0
3 years ago
Read 2 more answers
In a Las Vegas casino, an employee discovered a flaw in the accounting system. The accounts payable clerk discovered that he was
kap26 [50]

Answer:

- This type of fraud is check tampering

- It amounts to 20.1% of fraud cases in small businesses, and 8.4% of fraud in large businesses

- This type of fraud can be prevented by rotating employees that handle check issuance to vendors, review of budget versus actual expenditure, monitoring of audit trail to see if beneficiary was changed, daily statement download for reconciliation, and restriction of functions for example a employee that issues checks should not also reconcile bank statement.

Explanation:

Check tampering is a very common fraud that involves changing the beneficiary of a valid check so that funds can be diverted.

In the given scenario the accounts payable clerk was able to change checks to his name in order to divert $10,000. This was only discovered by chance when an employee noticed the change in name.

Various internal control measures can be taken to prevent this and they are listed above

4 0
4 years ago
In its first year of existence (year 1), SCC corporation (a C corporation) reported a loss for tax purposes of $30,000. How much
devlian [24]

Answer:

SCC won't pay any tax

Explanation:

Their loss of $30,000 in year 1 will be unused and made available to counterbalance the total generated earnings in year 2.

The $20,000 earnings in year 2 can be used to counterbalance the whole taxable income; so, SCC will not pay pay tax. SCC will have a ($10,000) loss carryover available for year 3 and beyond

6 0
3 years ago
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