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
g100num [7]
4 years ago
9

Consider the multifactor APT with two factors. Stock A has an expected return of 17.6%, a beta of 1.45 on factor 1, and a beta o

f .86 on factor 2. The risk premium on the factor 1 portfolio is 3.2%. The risk-free rate of return is 5%. What is the risk-premium on factor 2 if no arbitrage opportunities exist?
Business
1 answer:
ehidna [41]4 years ago
5 0

Answer:

The risk premium on factor 2 = 9.26%.

Explanation:

Let us denote the risk premium of factor 2 as x

Below is the formula we can use to calculate the risk premium of factor 2.

Expected return on stock = (Beta (factor 1)* expected return of 1) +(beta of 2x * risk free reate)

17.6% = (1.45*3.2%) + 0.86x+5%

17.6 = 4.64 + 0.86x+5%

17.6 - 4.64 - 5= 0.86x

7.96 = 0.86x

x = 7.96/0.86 =9.2558

The risk premium on factor 2 = 9.26%.

You might be interested in
Receive 1 million in cash gift do i have to file taxes
Ierofanga [76]

Answer:

Gift tax is not an issue for most people

Explanation:

The person gifting files the gift tax return, if necessary, and pays any tax. If someone gives you more than the annual gift tax exclusion amount ($15,000 in 2020), the giver must file a gift tax return.

8 0
3 years ago
Gantner Company had the following department information about physical units and percentage of completion: Ch21_Q64 If material
Basile [38]

Answer:

200,000 units

Explanation:

The computation of the total no of equivalent units for material during may month is given below:

Units added during May is

= 150,000 + 50,000

= 200,000 units.

Hence, the total no of equivalent units for material during may month is 200,000 units

The same should be considered and relevant  

6 0
3 years ago
American Airlines has established a goal of increasing its profits by 12 percent next year. To ensure that the goal is reached,
Nimfa-mama [501]

Answer:

Controlling  function

Explanation:

Management is an authority that is hiring in the company or business for gaining profit and provide stability to the business. In business, management authorities have the power to control and decide the necessary step that provides gain to the business.

In the case of American Airlines, management has all Controlling  functions that help them to get back business on track.

8 0
3 years ago
refer to the accompanying national income data (in billions of dollars). the gross domestic product for this economy is
jeka94

Answer: $623 billion

Explanation:

Gross Domestic Product refers to the final value of the goods and services produced within a country in a certain period which is usually a year.

It can be calculated by several approaches with one of them being the Expenditure approach.

The formula is:

= Consumption + Investment + Government spending + Net exports

= 400 + 88 + 128 + 7

= $623 billion

4 0
3 years ago
In this assignment, you'll use a word processor to create a newsletter based on the following scenario: Suppose that you are a s
adelina 88 [10]

A high school secretary is under obligation to convey the students regarding the rules and regulations as well as the upcoming events that are about to take place in a high-school through a newsletter.

<h3>What is a newsletter?</h3>

A bulletin of information, which is circulated among the members of an organization and any such person who has substantial interest in such information, is regarded as a newsletter.

A newsletter is attached in the form of an image with this part for the purpose of reference.

Hence, a newsletter that is required to be circulated by the high-school secretary will be in the form of the image being attached.

Learn more about newsletter here:

brainly.com/question/26221447

#SPJ1

6 0
2 years ago
Other questions:
  • Which of the following would a macroeconomist consider as investment? A. Marisa purchases a bond issued by Proctor and Gamble Co
    15·1 answer
  • Today, sandra will present a report to her class on the top ten income-producing countries in the world. most of the countries t
    14·1 answer
  • A firm will find it profitable to hire workers up to the point at which their rev: 06_21_2018 Multiple Choice marginal resource
    11·1 answer
  • Some of the transactions of Torres Company during August are listed below. Torres uses the periodic inventory method.
    10·1 answer
  • 1+1<br><br> \ROAST BACK TIMES GOOOOOO GOOOOOOO GOOOOOOO
    6·2 answers
  • Help please!!
    7·1 answer
  • Purchase Company recently acquired several businesses and recognized goodwill in each acquisition. Purchase has allocated the re
    8·1 answer
  • When buyers in a competitive market take the selling price as given, they are said to be a. monopolists. b. free riders. c. pric
    9·1 answer
  • Carol and leslie enter into a contract stating that carol will pay leslie $650 per month for the next 20 years. carol will live
    10·1 answer
  • 33. This question refers to the videos we watched about the “Crisis of Credit.” 1. Before 2008, why did investment bankers think
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!