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Dima020 [189]
3 years ago
11

A stock has an expected return of 13.5 percent, its beta is 1.40, and the expected return on the market is 11.5 percent. What mu

st the risk-free rate be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Business
1 answer:
uranmaximum [27]3 years ago
6 0

Answer:

The risk free rate is 6.50%

Explanation:

The required rate of return is the minimum return that investors demand/expect on a stock based on the systematic risk of the stock as given by the beta. The expected or required rate of return on a stock can be calculated using the CAPM equation.

The equation is,

r = rRF + Beta * (rM - rRF)

Where,

  • rRF is the risk free rate
  • rM is the return on market

As we know the figures for r, Beta and rM, we will input these figures in the equation to calculate risk free rate.

Let risk free rate be x.

0.135 = x + 1.4 * (0.115 - x)

0.135 = x + 0.161 - 1.4x

0.135 - 0.161  =  x - 1.4x

-0.026  =  -0.4x

-0.026 / -0.4 = x

x =  0.065 or 6.50%

r = 0.1475 or 14.75%

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blagie [28]
Hello,

Here is your answer:

I think the proper answer to this question will be option A "select a site". That's just because when planing a convention you have to find a place to hold it, form the committee, write the program, and then you have to write invites.

Your answer is A!

If you need anymore help just ask me!
7 0
2 years ago
1. A company issues new stock with a fair value of $120,000 to acquire 85% of the stock of another company. The fair value of th
Delicious77 [7]

Answer:

A. $10,500

Explanation:

FV of IDNA:  

Book value                                                     $ 15,000

Revalued plant assets                                    ($25,000)

license agreements                                           $30,000

Intangible assets                                             $50,000

                                                                           $ 70,000

Non-controlling interest valued at the date of acquisition, following the alternative method allowed by IFRS = 15% * 70,000 =  $10,500.

4 0
3 years ago
"Kim wants to run for the U.S. Senate. Kim experimented with drugs in the 1960s, but has not used any drugs in more than 45 year
marishachu [46]

Answer:

The communication behaviour that kim is engaged in is selective self-disclosure.

Explanation:

Self-disclosure is a process of communication by which one person reveals information about themselves to another. The information can be descriptive or evaluative, and can include thoughts, feelings, aspirations, goals, failures, successes, fears, and dreams, as well as one's likes, dislikes, and favorites.

Selective self-disclosure means self-disclosure but providing only that information which will create a positive image of one person on another.

6 0
3 years ago
The basic difference between a good and a service is that a good:
alexgriva [62]

Answer:

The correct answer is letter "B": can be physically touched.

Explanation:

Goods are those <em>material </em>assets that satisfy consumers' needs. Services are also provided to fulfill individuals' wants but they are <em>intangible</em>, meaning even if goods can be rendered from one person to another, services cannot be touched or perceived with the senses. The creation of goods and services to cover different types of necessities is what drives countries' economies.

6 0
3 years ago
Beginning on January 1, 2020, 5 equal deposits are to be made in a fund. Required: Using the appropriate tables, determine the e
8090 [49]

Answer:

Explanation:

FV \div \frac{(1+r)^{time} -1}{rate} = C\\  

FV  $200,000.00  

time 5 years

rate 0.1% = 10/100 = 0.10

200000 \div \frac{(1+0.1)^{5} -1}{0.1} = C\\  

C  $ 32,759.496  

The installment will generate 10% interest overtime and provide with a 200,000 dollar count after six years

7 0
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