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
finlep [7]
3 years ago
14

Porter Inc's stock has an expected return of 12.50%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 2.00%, what

is the market risk premium? Do not round your intermediate calculations.
a. 6.80%
b. 7.98%
c. 8.40%
d. 10.50%
e. 8.48%
Business
1 answer:
Jlenok [28]3 years ago
8 0

Answer:

c. 8.40%

Explanation:

Use CAPM formula to solve this question;

CAPM r = risk free + beta(Market risk premium)

expected return ;r = 12.50% or 0.125 as a decimal

0.125 = 0.02 + 1.25 (MRP)

subtract 0.02 from both sides;

0.125 - 0.02 = 1.25MRP

0.105 = 1.25MRP

Divide both sides by 1.25 to solve for MRP

0.105/1.25 = MRP

0.084 = MRP

Market risk premium (MRP) is therefore 8.40%

You might be interested in
Caroline, the manager of a jewelry store, conducts statewide market research and collects data on customer preferences toward va
Brrunno [24]
Caroline will most likely be performing the prescriptive role of marketing research. Prescriptive analytics are known for processes data from their findings and using it to better suit the company in marketing tactics. Then they are able to present it to their team and in this situation, know which items are top sellers and which aren't. Caroline will use this data to determine what customers are attracted to, what they buy and how she can bring in more revenue to the jewelry store she manages. 
7 0
2 years ago
Why should employees be wary of participating in the grapevine in a business
Zielflug [23.3K]

First, we need to understand what grapevine means in business communication. Therefore, grapevine communication is a form of informal communication within a business organization, in other words, information is never accurate with grapevine, and this will certainly pose a threat to any business, remember, effective communication is an integral part of any organization.

Below are some of the reasons why managers should be wary of grapevine communication


1) Communications through grapevines are often not trustworthy as it is an unofficial way of communication.

2) It might cause a hostile environment between lower level staff and the executives, for instance, a colleague tells you that the boss is not happy with your work, or that your boss said he doesn't like you, this might be false, and it might affect your attitude towards your boss.

3) It can lead to discouraging news, which can then affect productivity.  Imagine a story flying around the office, that management wants to retrench workers or wants to approve salary cut, now if this information is false, so many people within the lower level staff, will get discouraged, or get unnecessarily worried, this will certainly affect there work rate.


 Managers are often advised to be wary of grapevine within an organization, however, managers should note that grapevine cannot be eliminated from any organization, but it can be minimized if managers engage in effective communication with their employees.

5 0
2 years ago
A supply curve​ _______.
photoshop1234 [79]
Supply curve shows when quantity increases the price also increases and vice versa
4 0
2 years ago
Assume that the reserve requirement for the commercial banks is 25%. If the Federal Reserve Banks buy $3 billion in government s
faltersainse [42]

Answer:

The lending ability will increase by $2.25 billion.

Explanation:

The reserve requirement is given at 25%.

If federal reserve bank buys $3 billion in government securities, the total reserve will increase by $3 billion.

The excess reserve will be

=Increase in total reserve-required reserve

=$3 billion-25% of $3

=$(3 billion- .25*3) billion

=$(3-0.75) billion

=$2.25 billion

5 0
3 years ago
Joey notices that people always compliment his Dad on the nice suits that he wears. His Dad owns a business in town. People alwa
liberstina [14]

Answer: Orientation to internal, unique self  

Explanation: In simple words, orientation refers to the process of determining the position of one self or the others with respect to a particular situation.

In the given case, Joey has to make a decision that impacts his personal life and he has to make it himself. Therefore, the confusion he is having about the decision depicts that he is at the stage of internal orientation.

7 0
2 years ago
Other questions:
  • The $10,000 cash that exceeds the partnership liabilities is to be disbursed immediately. If profits and losses are allocated to
    13·1 answer
  • Students must choose to use their time after school either to work, to complete homework, or to relax. Which concept does this i
    9·1 answer
  • Suppose that in a month the price of oranges increases from $.75 to $1. At the same time, the quantity of oranges demanded decre
    7·1 answer
  • List the four stages of ability development. Provide an example of a person developing a specific ability. What would each stage
    12·1 answer
  • Analyze and describe how the fluctuating global market, organizational structure, and the technology revolution have impacted th
    14·1 answer
  • Suppose Apple builds a plant in Taiwan and agrees to take 30% of the plant's output as
    15·1 answer
  • when creating content for an audience that may be visually impaired to a point be sure to choose_____?
    15·1 answer
  • What is the impact on the non-controlling interest of a subsidiary when there are downstream transfers of inventory between the
    15·1 answer
  • Sawchuck Consulting has been profitable for the last 5 years, but it has never paid a dividend. Management has indicated that it
    12·2 answers
  • The issuance of equity for a firm with various financing alternatives signals that the firm has unfavorable prospects which it w
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!