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
yan [13]
3 years ago
10

The risk-free rate is 4.2%, and the expected return on the market is 10%. A publicly-traded bond promises to return 8%. The expe

cted return on the bond investment is 5.5%. What is the bond's implied beta?
a) 0.45
b) 0.22
c) 0.73
d) 1.38
Business
1 answer:
AnnZ [28]3 years ago
6 0

Answer: the bond's implied beta= 0.22-b

Explanation:

According to Capital Asset Pricing Model CAPM, we have that  

Expected return =Rf + β(Rm - Rf)

Rm is expected return on market

β= beta of bond

Rf=risk free return

therefore

Expected return =Rf + β(Rm - Rf)

5.5 = 4.2 +  β(10-4.2)

5.5=4.2+ β5.8

5.5-4.2= β5.8

1.3=β5.8

β= 1.3/5.8=0.22

You might be interested in
The opportunity cost of an additional 100 dolls is 100 fire trucks. b The opportunity cost of an additional 100 dolls is 50 fire
SVEN [57.7K]

Answer:

The correct answer is The opportunity cost of an additional 100 dolls increases as more dolls are produced.

Explanation:

The opportunity cost is understood as the cost incurred in making a decision and not another. It is that value or utility that is sacrificed for choosing an alternative A and neglecting an alternative B. Taking a path means that the benefit offered by the discarded path is waived.

In any decision taken there is an implicit waiver of the utility or benefits that could have been obtained if any other decision had been made.

For each situation there is always more than one way to address it, and each form offers a greater or lesser utility than the others, therefore, whenever one or the other decision is made, the opportunities and possibilities offered by the others will have been renounced, that may be better or worse (opportunity cost greater or lesser).

7 0
3 years ago
Which of the following items is not considered evidence in determining if a valuation allowance is necessary? A. A cumulative bo
tatyana61 [14]

Answer:

Management can implement a tax strategy to create future taxable income, but it will be detrimental to the future profitability of the company.- D.

8 0
3 years ago
What element of Pinterest can help potential followers learn more about your product and company?
madreJ [45]
Could the answer be advertisements
5 0
3 years ago
The following information is taken from Reagan Company's December 31 balance sheet: Cash and cash equivalents $ 9,619 Accounts r
abruzzese [7]

Answer:

46.07 days

Explanation:

Calculation for the firm's days' sales uncollected for the year

Using this formula

Days' Sales Uncollected Ratio = Ending Accounts Receivable/Net Sales * 365

Let plug in the formula

Days' Sales Uncollected Ratio = ($76,422/$605,500) * 365

Days' Sales Uncollected Ratio = 46.067 days

Days' Sales Uncollected Ratio = 46.07 days Approximately

Therefore the firm's days' sales uncollected for the year is: 46.07 days

5 0
3 years ago
National Bank quotes the following for the British pound and the New Zealand dollar: Quoted Bid Price Quoted Ask Price Value of
Snowcat [4.5K]

Answer:

$15.43

Explanation:

Following actions are required for triangular arbitrage:

Available: $ 10,000

Buy sterling pound @ 1 $ = 1.62 pounds and receive pounds 6172.84 upon conversion.

Now, sell these pounds and purchase NZ $ at the rate :

1 pound = NZ $ 2.95 and receive NZ$ 18209.87

Now, reconvert the above proceeds into US $ at the rate

1 NZ $ = $0.55 i.e sell NZ $ at this rate and receive US $ 10,015.4285

Hence profit from implementing triangular arbitrage is $10,015.43 - $10,000

= $15.43

Arbitrage refers to the prospect of earning a profit by utilizing the mispricing in two different financial markets. An arbitrageur never uses his own funds and always borrows.

Arbitrage works only in the scenario wherein the interest rate purchase parity (IRPT) does not hold good.

The strategy of arbitrage is best explained as "Buy at low price and sell at a high price".

 

7 0
3 years ago
Other questions:
  • Accounts that are increased with a debit include A : revenue. B : assets. C : equity. D : liability.
    11·1 answer
  • The exchange rate is the opportunity cost at which goods are produced domestically. balance-of-trade ratio of one country to ano
    11·1 answer
  • At the beginning of the year, Young Company bought three used machines from Vince, Inc. The machines immediately were overhauled
    13·1 answer
  • Metlock, Inc. purchases land for $430000 cash. The clinic assumes $4600 in property taxes due on the land. The title and attorne
    5·1 answer
  • Wexpro, Inc., produces several products from processing 1 ton of clypton, a rare mineral. Material and processing costs total $6
    8·1 answer
  • You believe that the future value of the Australian dollar will be determined by purchasing power parity (PPP). You expect that
    14·1 answer
  • How many classes are there to be documented in high school yearbook?
    5·1 answer
  • Joseph (43) and Azalea (44) are married with no dependents. They will file separate returns for 2020. Joseph files his return fi
    7·1 answer
  • Lower-level managers are empowered to make decisions in a ______ organization, which can ________ motivation and job satisfactio
    13·1 answer
  • although almost everyone advocates a balanced budget, every spending program and tax break is defended by organized beneficiarie
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!