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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%

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College president Wally contracts with Alice to teach a business law class. Alice does a fine job teaching, but she has an argum
solong [7]

Answer:

Specific performance

Explanation:

Based on the information provided within the question it can be said that in this scenario the order that Wally should seek is known as Specific performance. This is a court order which forces the breaching party to perform the agreed upon act, and by doing so complete the agreed upon specifications set forth by the contract. Failure to do so will find the individual in contempt of court.

6 0
3 years ago
uses job order costing to measure and track product costs. Raleigh has determined that machine hours drive its manufacturing ove
polet [3.4K]

Answer:

Allocated MOH= $4,000

Explanation:

Giving the following information:

Machine hours used 1,000 hours

If total manufacturing overhead costs during the month totaled $100,000 when a total of 25,000 machine hours were used

First, we need to calculate the estimated overhead rate:

Estimated manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Estimated manufacturing overhead rate= 100,000/25,000= $4 per machine hour

Now, we can allocate overhead to Product 95:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Allocated MOH= 4*1,000= $4,000

5 0
3 years ago
First National Bank charges 13.6 percent compounded monthly on its business loans. First United Bank charges 13.9 percent compou
melomori [17]

Answer:

First National EAR 14.48%

First United EAR 14.38%

Explanation:

Calculation to determine Calculate the EAR for First National Bank and First United Bank.

Using this formula

EAR = [1 + (APR / m)]m − 1

Let plug in the formula

First National EAR = [1 + (.136 / 12)]12 − 1

First National EAR= .1448*100

First National EAR=14.48%

First United EAR = [1 + (.139 / 2)]2 − 1

First United EAR = .1438*100

First United EAR = 14.38%

Therefore the EAR for First National Bank and First United Bank will be :

First National EAR 14.48%

First United EAR 14.38%

8 0
3 years ago
Clampett, Inc. converted to an S corporation on January 1, 2018. At that time, Clampett, Inc. had cash ($40,000), inventory (FMV
Lubov Fominskaja [6]

Answer

The answer and procedures of the exercise are attached in image below.  

Explanation  

Please consider the data provided by the exercise. If you have any question please write me back. All the exercises are solved in a single sheet with the formulas indications.  

7 0
2 years ago
Refer to Exhibit 3-17. At a price of $20, the quantity demanded of good X is ____________ than the quantity supplied of good X,
zlopas [31]

Answer:

Less, fall, toward

Explanation:

Refer to Exhibit 3-17. At a price of $20, the quantity demanded of good X is less than the quantity supplied of good X, and economists would use this information to predict that the price of good X would soon fall. This would push the price toward the equilibrium price.

3 0
3 years ago
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