Answer:
a. increasing opportunity costs as more and more of one good is produced
Explanation:
A production possibility frontier is a curve that shows the two combinations of goods an economy can produce given that its resocurces are fully employed.
The production possibility curves is bowed outwards because of increasing opportunity costs as more and more of one good is produced.
If more of one good is to be produced, more of the second good would be given up to increase the production of the first good.
The attached image is the graph of a production possibility frontier. At point A, the maximum amount of good X is produced with zero quantity of good Y. To increase production of good Y and move to point B, some quantities of good X would be given up. To further increase the production of good Y and move to point C, even more quantities of good X would be given up.
I hope my answer helps you
The four types of pricing methods.
Answer:
a) The required rate of return is 14.75%
b) The expected return on this stock is 16% which is more than its required rate of return 14.75%, thus it is underpriced.
Explanation:
a)
Using the SML equation, we can calculate the required rate of return (r) of a stock.
r = rFR + β * (rM - rFR)
r = 6% + 1.25 * (13% - 6%)
r = 0.1475 or 14.75%
b)
The SML shows the return that is required on a security based on the risk is carries. Using SML we calculate the required rate of return which is the percentage return that investors require a security to provide.
If the expected return is greater than the required rate of return which means that security is expected to provide more than is required then the security is underpriced.
The expected return on this stock is 16% which is more than its required rate of return 14.75%, thus it is underpriced.
IRR function for this problem is 7. 7% and invest in the project
<h3>What is
IRR function?</h3>
The Excel IRR function returns the internal rate of return (IRR) for a sequence of cash flows that occur at regular intervals. Determine the internal rate of return. Return was calculated as a percentage. =IRR (values, [guess])
IRR is the interest rate at which the sum of all cash flows equals zero, thus it is useful for comparing one investment to another. In the preceding example, if we substitute 8% with 13.92%, the NPV becomes 0, and your IRR becomes zero. As a result, IRR is defined as the discount rate at which a project's NPV becomes zero.
To know more about IRR function follow the link:
brainly.com/question/24301559
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<span>Dow
Jones Industrial Average (DJIA) is the widely followed and best known stock
index because it is composed of companies that are under the industrial and
consumer industry. The price of the stock under the Dow Jones Industrial
Average is divided by divisors which are used in this index.</span>