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
Yuri [45]
3 years ago
11

The common stock of Alpha Manufacturers has a beta of 1.18 and an actual expected return of 13.33 percent. The risk-free rate of

return is 3.3 percent and the market rate of return is 12.20 percent. Which one of the following statements is true given this information?
A. The stock has less systematic risk than the overall market.
B. To be correctly priced according to CAPM, the stock should have an expected return of 13.56 percent.
C. The actual expected stock return will graph above the security market line; thus the stock is underpriced.
D. The actual expected stock return indicates the stock is currently overpriced.
Business
1 answer:
nekit [7.7K]3 years ago
5 0

Answer:

D. The actual expected stock return indicates the stock is currently overpriced.

Explanation:

The actual rate of return of this stock = 13.33%

Rate of return using CAPM:

r = risk free rate + beta(Market return- risk free rate)

risk free = 3.3% or 0.033 as a decimal

beta = 1.18

market return = 12.20% or 0.1220 as a decimal

r = 0.033 + 1.18(0.1220 - 0.033)

= 0.033 + 0.10502

= 0.1380 or 13.80%

Since rate of return and price of a stock have inverse relationship, the actual rate of return is lower meaning that the stock is currently overpriced.

You might be interested in
Susan Daniels works for an event management company and is discontent with her job because she was passed over for a promotion.
Verdich [7]

Answer:

The correct answer is Voice.

Explanation:

Taking into account the framework of exit, voice, loyalty and negligence, voice means directly raising comments on a particular situation that influences within the work team, so that superiors are aware of situations and can ask themselves solutions for the benefit of all.

4 0
3 years ago
Consumption spending is $4.5 billion, gross private domestic investment is $3 billion, and government expenditures are $2 billio
masha68 [24]

Answer:

exports are $15 billion, and imports are $10.5 billion

Explanation:

GDP is the sum of all final goods and services produced in an economy within a given period which is usually a year.

GDP = Consumption + Investment spending + Government Spending + Net Export

14 billion = 4.5 billion + $3 billion + $2 billion + Net Export

Net Export = $4.5 billion

Net Export = export - import

Net Export is positive so it indicates that exports is greater than imports.

Going through the options, it is only option d that is equal to 4.5 and the export is greater than the import.

I hope my answer helps you

7 0
3 years ago
"Gamboa, Inc. sold 100 selfie sticks for $25 each. If the selfie sticks had an average cost of $1 to produce, how much profit di
IRISSAK [1]

Answer:

$2400

Explanation:

Average cost is the ratio of total cost of production to the total number of units produced, it is the sum of both the average fixed cost and the average variable cost. The average cost is given by the formula:

Average cost = Total cost / number of units.

Given that:

The total number of units produced = 100 selfie sticks, Average cost = $1 and Price of each selfie stick = $25

From Average cost = Total cost / number of units.

Substituting gibes:

$1 = Total cost / 100 selfie stick

Total cost = $1 × 100 = $100

Total cost = $100

Revenue = Price per item × Number of items

Revenue = $25 × 100 = $2500

Profit = Revenue - Total cost

Profit = $2500 - $100 = $2400

Total cost = $2400

5 0
3 years ago
In​ 2008, the required reserve ratio for a​ bank's first​ $9.3 million in checking account deposits was zero. It was 3 percent o
Greeley [361]

Answer:

In most cases the deposits have a reserve ratio of 10% but in some cases the ratio is 0% and 3%, both these numbers are lower than 10. This means that in most cases the ratio is 10% and in some cases the ratio is less than 10 % so the real word deposit multiplier will be less than 10.

Explanation:

8 0
3 years ago
An absolute definition of poverty is:________a) a relatively fixed level of income above which a person cannot function in a pro
mafiozo [28]

Answer:

d) Neither A nor B

Explanation:

Poverty refers to a financial state wherein an individual is unable to meet the most basic needs for survival such as food clothing and shelter.

Absolute poverty refers to a state wherein the income of a household is below a certain threshold level which makes it hard to meet the basic necessities of life such as food, shelter, water and sanitation.

The concept of relative poverty makes a comparison i.e relatively to others. When one is relatively poorer than others. The person in such a scenario may be able to meet his ends but relative to other households income, shall be termed as poor.

8 0
3 years ago
Other questions:
  • 4.
    10·1 answer
  • When a purchaser authorizes a broker to collect their commission from the listing broker or seller pursuant to an Exclusive Righ
    5·1 answer
  • Aaron and Donald sign a written contract in which Aaron agrees to supply raw materials to Donald’s company in return for set fee
    14·1 answer
  • Metal Manufacturing has isolated four alternatives for meeting its need for increased production capacity. The following table s
    11·1 answer
  • T. Bina and M. Valley are partners with equal capital balances of $50,000 each. They agree to let R. Smith invest $20,000 in the
    15·1 answer
  • Grant, Inc., acquired 30% of South Co.’s voting stock for $200,000 on January 2, Year 1, and did not elect the fair value option
    10·1 answer
  • Friends of the Court" documents filed by interested parties to encourage the Court to grant or deny certiorari, or to urge the C
    10·1 answer
  • A student copies information from a website into a term paper without giving credit. This action is most strongly related to whi
    11·2 answers
  • In a statistics examination the mean score was 78 and the standard deviation was 10
    7·1 answer
  • Mountain Springs Water Company has two departments, Purifying and Bottling. The Bottling Department had 2,900 liters in beginnin
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!