Answer:
A well-respected chairman of the Federal Reserve Bank suddenly resigns
Explanation:
A non-diversifiable or systematic risk, is a risk which is common to a whole market or class of investments and not just limited to just a particular company or investment.
Non-systematic risk is a risk common to just an investment or a company.
If the chairman of the Federal Reserve Bank suddenly resigns, it would affect a wide range of investments in the market and not just a company, which is an example of a non-diversifiable risk.
Answer:
37.9 days
Explanation:
Given that,
Net sales = $951,000
Beginning accounts receivables = $75,500
Ending accounts receivables = $122,000
Average accounts receivables:
= (Beginning accounts receivables + Ending accounts receivables) ÷ 2
= ($75,500 + $122,000) ÷ 2
= $98,750
Accounts Receivable Turnover:
= Net sales ÷ Average accounts receivables
= $951,000 ÷ $98,750
= 9.63
Average collection period:
= 365 days ÷ Accounts Receivable Turnover
= 365 days ÷ 9.63
= 37.9 days
Answer:
14.05%
Explanation:
Given that,
Beta = 1.3
Risk-free rate (Rf) = 9.5%
Return on the Market (RM) = 13%
According to CAPM approach:
Cost of common equity (RE):
= [Rf + β (RM – Rf)]
= [9.5% + 1.3 (13% - 9.5%)]
= [9.5% + 1.3 (3.5%)]
= [0.095 + 1.3 (0.035)]
= [0.095 + 0.0455]
= 0.1405
= 14.05%
Therefore, the firm's cost of common equity is 14.05%.
