All categories

4 years ago

Here are data on two companies. The T-bill rate is 5.8% and the market risk premium is 7.4%.

Business

1 answer:

cupoosta [38]4 years ago

5 0

Answer:

18.38% and 13.2%

Explanation:

As we know that

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

So for Discount store, it is

= 5.8% + 1.7 × 7.4%

= 5.8% + 12.58%

= 18.38%

And for everything store, it is

= 5.8% + 1.0 × 7.4%

= 5.8% + 7.4%

= 13.2%

The Market rate of return - Risk-free rate of return) is also known as the market risk premium and the same is applied.

You might be interested in

Behavioral economist Richard Thaler has studied several examples of how businesses make use of inconsistencies in consumer deci

KATRIN_1 [288]

Answer:

The correct answer is: An example of businesses taking advantage of inconsistencies in consumer decision-making is credit card companies not allowing stores to charge a fee to consumers if they pay with a credit card but allowing stores to provide a discount to consumers if they pay in cash

Explanation:

The purchase decision process is the decision-making process used by consumers regarding market transactions before, during and after the purchase of a good or service. It can be seen as a particular form of a cost-benefit analysis in the presence of multiple alternatives.

5 0

4 years ago

If textbooks and study guides are complements, then an increase in the price of textbooks will result in a. more textbooks being

julia-pushkina [17]

Answer:

d. fewer study guides being sold

Explanation:

If there is an increase in the price of textbooks, it is fair to assume that demand for textbooks will fall and, thus, textbooks sales will also fall. When goods are complements, a decrease in demand for a certain good means that its complements will also experience a similar decrease in demand. Since textbooks and study guides are complements, the sales of study guides will also fall.

Therefore, the answer is d. fewer study guides being sold

7 0

3 years ago

E. L. Thorndike’s Law of Effect states that _________.a. It states a response followed by a reward is more likely to recur in th

AlexFokin [52]

Answer:

A) It states a response followed by a reward is more likely to recur in the future.

Explanation:

E.L. Thorndike stated in 1898 that the Law of Effect in psychology is a behavioural term used to describe the attitude of humans towards positive responses. The Law of Effect states that the responses that produce a satisfying effect to a particular situation become more likely to occur again in that situation and responses that produce a discomforting effect become less likely to occur again in that situation. This thus explains the situation when man's senses are programmed to positivity especially when it involves satisfaction. It also means that when a positive thing occurs, there is a strong possibility that it will occur again.

8 0

3 years ago

Pierce Chocolates and Berry Sweets both have new projects that require an initial investment of $450,000 and will have annual ca

Rom4ik [11]

Answer:

Explanation:

Using a financial calculator, input the following using the "CF" button;

<u>Pierce Chocolates has 5 years of cash inflows;</u>

Initial investment ; CF0 = - 450,000

Yr1 Cashflow; CF1 = 110,000

Yr2 Cashflow; CF2 = 110,000

Yr3 Cashflow; CF3 = 110,000

Yr4 Cashflow; CF4 = 110,000

Yr5 Cashflow; CF5 = 110,000

Then compute Internal rate of return; IRR CPT = 7.09%

<u>Berry Sweets has 6 years of cash inflows;</u>

Initial investment ; CF0 = - 450,000

Yr1 Cashflow; CF1 = 110,000

Yr2 Cashflow; CF2 = 110,000

Yr3 Cashflow; CF3 = 110,000

Yr4 Cashflow; CF4 = 110,000

Yr5 Cashflow; CF5 = 110,000

Yr6 Cashflow; CF6 = 110,000

Then compute Internal rate of return; IRR CPT = 12.18% hence higher.

6 0

3 years ago

Using marketing to promote the idea that a company is more socially responsible than it actually is can be described as ______.

earnstyle [38]

Answer:

Greenwashing

Explanation:

Greenwashing is the process of using marketing to promote the idea that a company is more socially responsible than it actually is. It is the process of passing a false impression or providing false information about how a company's products are more environmentally sound.

Greenwashing can also be called green sheen. It is used to deceive consumers into believing that a company's products are environmentally friendly by providing misleading information about the product.

Greenwashing is considered an unsubstantiated claim to deceive consumers into believing that a company's products are environmentally friendly.

8 0

3 years ago