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
LRQ Inc. issued bonds on April 18, 2006. The bonds had a coupon rate of 5.5%, with interest paid semiannually. The face value of
ankoles [38]

Answer:

$857

Explanation:

Price of the bond is the present value of all cash flows of the bond. These cash flows include the coupon payment and the maturity payment of the bond. Both of these cash flows discounted and added to calculate the value of the bond.

According to given data

Face value of the bond is $1,000

Coupon payment = C = $1,000 x 5.5% = $55 annually = $27.5 semiannually

Number of periods = n = (April 18, 2036 - April 18, 2020) years x 2 = 16 x 2 period = 32 periods

Market Rate = 7% annually = 3.5% semiannually

Price of the bond is calculated by following formula:

Price of the Bond = C x [ ( 1 - ( 1 + r )^-n ) / r ] + [ F / ( 1 + r )^n ]

Price of the Bond = 27.5 x [ ( 1 - ( 1 + 3.5% )^-32 ) / 3.5% ] + [ $1,000 / ( 1 + 3.5% )^32 ]

Price of the Bond = $524.29 + $332.59 = $856.98 = $857

8 0
3 years ago
When a tariff is imposed, there is always an additional loss. One loss occurs when consumers purchase fewer units of the good be
Yakvenalex [24]

Answer:

The correct answer is Production loss.

Explanation:

The quantifiable cost associated with the interruption of the operation of a pump is low when compared to the cost throughout its useful life in an installation carried out in a commercial building. However, the loss of comfort suffered by users of the building makes it advisable to have a spare pump.

Unlike what happens in production processes, stopping a pump from a commercial building almost never results in a loss of production. On the contrary, the interruption is usually translated into a loss of comfort. However, the immeasurable costs associated with downtime may be even higher if, for example, hotel guests run out of water. Therefore, it is always advisable to install a replacement pump to prevent comfort losses caused by an unexpected failure in the pumping system. The communication capabilities of electronically controlled pumps E help minimize downtime because replacement and repair work can be completed more quickly in the event of a breakdown. A backup pump is used to prevent downtime and consequent loss of comfort in the event of a breakdown.

4 0
3 years ago
After 160 customer reviews for the hotel, 65% were Excellent
Aneli [31]

Answer: 104 reviews

Explanation:

Number of customers reviews = 160

Percentage of customer reviews that were excellent= 65%

.

Number of customer reviews that were excellent will be:

= 65% × 160

= 65/100 × 160

= 0.65 × 160

= 104

104 reviews were excellent.

4 0
3 years ago
To prevent loss of work on the computer, it is essential to:
MA_775_DIABLO [31]

Answer: Its D. Save your document Frequently

Explanation: Hoped i helped!

4 0
3 years ago
What is the yield to maturity of a one-year zero-coupon bond with a $10,000 face value and a price of $9400
svp [43]

Answer:

6.383%

Explanation:

Calculation for the What is the yield to maturity

Using this formula

YTM=n√Face value/Bond price -1

Where,

n=one-year

Face value=10,000

Bond price=9,400

Let plug in the formula

YTM=1√10,000/9,400−1

YTM=1.06383-1

YTM=0.06383*100

YTM=6.383%

Therefore the yield to maturity will be 6.383%

3 0
3 years ago
Other questions:
  • Problem 13-22 The injection molding department of a company uses an average of 30 gallons of special lubricant a day. The supply
    8·1 answer
  • to have demand, what must you have a) a desire for the item. b) the ability to pay for the item. c) the desire and the ability t
    11·1 answer
  • The measure used to report price changes at the wholesale level is the:
    14·1 answer
  • The Deluxe Store is located in midtown Madison. During the past several years, net income has been declining because of suburban
    14·1 answer
  • Hines Cosmetic Co. sold beauty preparations nationally to beauty shops at a standard or fixed- price schedule. Some of the shops
    6·1 answer
  • The gosports company is a profit-maximizing firm with a monopoly in the production of school team pennants. the firm sells its p
    10·1 answer
  • On January 2, Dice Co. purchases a mixing machine for $25,500. The machine is expected to last four years and has a salvage valu
    12·1 answer
  • What types of money are included in the M2 category? Check all that apply.
    9·1 answer
  • the focal point in budgeting for a service organization is likely to be: a) capital assets acquisition. b) raw material utilizat
    11·1 answer
  • Jerrod owes $2000 on a credit card that charges him an annual percentage rate of 18%. If jerrod stopped making payments, how lon
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!