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
White raven [17]
3 years ago
12

Mikkelson Corporation's stock had a required return of 12.50% last year, when the risk-free rate was 3% and the market risk prem

ium was 4.75%. Then an increase in investor risk aversion caused the market risk premium to rise by 2%. The risk-free rate and the firm's beta remain unchanged. What is the company's new required rate of return
Business
1 answer:
hoa [83]3 years ago
7 0

Answer:

Beta = 2

New required rate of return = 16.50%

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)

12.50% = 3% + Beta × 4.75%

12.50% - 3% = Beta × 4.75%

So, the beta would be 2

The (Market rate of return - Risk-free rate of return)  is also known as the market risk premium

Now the required rate of return would be

= 3% + 2 × 6.75%

= 3% + 13.50%

= 16.50%

You might be interested in
Roberto Company uses a perpetual inventory system. On December 1, the company purchased $3,300 of merchandise for cash. Complete
Montano1993 [528]

Answer:

December 1, 202x, merchandise purchased for cash

Dr Merchandise inventory 3,300

    Cr Cash 3,300

Explanation:

When a company uses a perpetual inventory system, any purchases or sales are recorded directly using the appropriate inventory account. When a company uses a periodic inventory system, you should use a purchase account instead.

8 0
3 years ago
U.S. car dealers sell both used cars and new cars each year. However, only the sales of the new cars count toward GDP. Why does
Airida [17]

Answer:

It will be double counting

Explanation:

GDP or gross domestic product is the measure of the total value of productions in the economy per period. In calculating the GDP, economists consider only finished products produced within the borders of a country in a financial year.

Second-hand cars cannot be counted in the calculation of GDP because it will result in double counting. GDP is calculated using the income, expenditure, or production approach.  The second-hand cars were accounted for when they were purchased or sold for the first time. If the production method was used, the vehicles were accounted for in the year they were manufactured.

3 0
3 years ago
_____ are specific repayment conditions as to how long customers have to pay bills and the amount of cash discount allowed.
Natali5045456 [20]

Credit terms are specific repayment conditions as to how long customers have to pay bills and the amount of cash discount allowed.

<h3>What is the purpose of credit terms?</h3>

Credit terms are the payment requirements stated on an invoice. It is fairly common for sellers to offer early payment terms to their customers in order to accelerate the flow of inbound cash.

Credit means a loan, an agreement in which the lender (creditor) supplies the borrower with money, goods or services which is to be returned in future. Terms of credit apart from the rate of interest, collateral also includes documentation, mode of repayment.

To learn more about credit terms visit the link

brainly.com/question/13019978

#SPJ4

7 0
2 years ago
Which of the following personnel policies is not relevant to recruitment
Lena [83]
<span>Lead-the-market pay strategies. An employer may choose to establish an internal compensation strategy that is in excess of the pay rates in the prevailing marketplace. This compensation strategy may increase the supply of candidates, increase selection rates of qualified applicants, decrease employee turnover, increase morale and productivity, or prevent unionization efforts. However, prior to implementing a lead compensation strategy, an organization should carefully consider what benefits it expects to realize from such a strategy, keeping in mind that this type of structure has the greatest propensity of increasing overall labor costs.</span>
4 0
3 years ago
Read 2 more answers
Laura's boss, Erik, constantly uses sexually explicit language while communicating with his female subordinates. Though many fem
Fittoniya [83]

Answer:

I shouldn't believe or think this will be viewed as offensive conduct because he doesn't threaten any lady throughout particular. A further explanation is given below.

Explanation:

  • Complaining about discrimination based on private orientation as either a misconduct action throughout Title VII of the 1964 civil rights legislation including 29 C.F.R. including its Federal EEO Action Process Portion 1614.
  • Instead of repeatedly being told by the organization that the allegations of private identity are usually processed within sections 1614 unless specifically requested by the complainant to use a different litigation procedure.
3 0
3 years ago
Other questions:
  • according to the rule of 72, if Beth invests $200 and $1300 into two separate accounts with the same interest rate, which amount
    7·2 answers
  • Thirty-five percent of the world's commercial energy is produced from _______.
    9·1 answer
  • McRae Corporation's total current assets are $460,000, its noncurrent assets are $560,000, its total current liabilities are $38
    6·1 answer
  • What is the best source of information for deciding whether a product meets your needs?. A. the product's advertisements. B. the
    14·2 answers
  • The annual demand is 8,000 units, the cost to place an order is $50, and the holding cost for each assembly is $20 per year. the
    5·1 answer
  • A corporation issued 5,000 shares of its no par common stock that was assigned a $1 stated value per share. The issue price was
    9·1 answer
  • For each market listed below, determine whether it is best characterized as a Cournot oligopoly, Stackelberg oligopoly, or Bertr
    9·1 answer
  • The president of a consulting firm wants to minimize the total number of hours it will take to complete four projects for a new
    9·1 answer
  • Alisha has a five-year car loan of $15,000 with an interest rate of 6 percent. If the interest is compounded annually, how much
    8·1 answer
  • Which of the following investments choices is least risky?
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!