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7nadin3 [17]
3 years ago
8

Stock A has a beta of .5, and investors expect it to return 5%.

Business
1 answer:
Snezhnost [94]3 years ago
7 0

Answer:

The expected rate of return and the market risk premium on the market is 7% and 4% respectively

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

Let us assume Risk free-rate of return be X

And, the market rate of return be Y

For Stock A

5% = Risk-free rate of return + 0.5 × (Market rate of return - Risk-free rate of return)

5% = X + 0.5 × (Y - X)

5% = 0.5X + 0.5Y

For Stock B

9% = Risk-free rate of return + 1.5 × (Market rate of return - Risk-free rate of return)

9% = X + 1.5 × (Y - X)

9% = -0.5X + 1.5Y

By comparing the equations,

14% = 2Y

Y = 7%

And, X equals to

5% = 0.5X + 3.5%

1.5% = 0.5X

X = 3%

So, expected rate of return is 7%

And the market risk premium

= 7% - 3%

= 4%

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Explanation:

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V stands for Voice which means trying to change the situation of things rather than escaping from that dissatisfying situation. It can be constructive or destructive.

L stands for Loyalty such Employees in this category respond to dissatisfaction by waiting patiently for the issue to be solved out with time or by other.

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4 0
3 years ago
When Managing the Sales force you must:
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Answer:

Right option is A

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Explanation:

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If you can invest $1,000 today and it will grow to be worth $1,350 over the next 6 years, what is the compound annual return you
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Answer:

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Substituting the values, we get =RATE(6,-1000,1350)

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Answer:

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