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Varvara68 [4.7K]
4 years ago
6

Compute the expected rate of return for Intel common​ stock, which has a 1.4 beta. The​ risk-free rate is 3 percent and the mark

et portfolio​ (composed of New York Stock Exchange​ stocks) has an expected return of 14 percent. b. Why is the rate you computed the expected​ rate?
Business
1 answer:
Amiraneli [1.4K]4 years ago
8 0

Answer:

The expected return is 17.3%

Explanation:

Capital asset pricing model measure the expected return on an asset or investment. it is used to make decision for addition of specific investment in a well diversified portfolio.

Formula for CAPM

Expected return = Risk free rate + beta ( market return - risk free rate )

Expected return = 3% + 1.4 ( 14% - 3% )

Expected return = 3% + 1.4 ( 11% )

Expected return = 3% + 14.3%

Expected return = 17.3%

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The balance sheet of Hidden Valley Farms reports total assets of $810,000 and $945,000 at the beginning and end of the year, res
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Answer:

$131,625

Explanation:

The computation of the net income for the year is shown below:

As we know that

Return on assets = net income ÷ average assets

0.15 = net income ÷ ($810,000 + $945,000) ÷ 2

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So, the net income is

= $877,500 × 0.15

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We simply applied the above formula

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