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sergey [27]
3 years ago
9

If the market risk premium is 8%, then according to the capm, the risk premium of a stock with beta value of 1.7 must be:

Business
1 answer:
Zinaida [17]3 years ago
4 0

The Capital Asset Price Modeling (CAPM) gives the formula for calculating the expected return of an asset given the risk as:

Rs = Rf + β<span> (Rm – Rf)
Where,</span>

Rs = expected return of the financial asset

Rf = risk free rate of return

β = beta value of the asset

Rm = average return on the capital market

The factor (Rm – Rf) is also called as the market risk premium while the factor (Rs – Rf) is the stock risk premium.

Rs – Rf = β (Rm – Rf)

Rs – Rf = 1.7 (0.08)

Rs – Rf = 0.136 = 13.6%

Answer:<span> greater than 12%  (= 13.6%)</span>

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The four major expenditure categories of GDP are: Group of answer choices consumption, government purchases, taxes, and investme
Nimfa-mama [501]

Answer:

consumption, investment, government purchases, and net exports.

Explanation:

The Gross Domestic Products (GDP) is the measure of the total market value of all finished goods and services made within a country during a specific period.

Simply stated, GDP is a measure of the total income of all individuals in an economy and the total expenses incurred on the economy's output of goods and services in a particular country. The Gross Domestic Products (GDP) of a country's economy gives an insight to it's social well-being.

Basically, the four major expenditure categories of GDP are consumption, investment, government purchases, and net exports.

4 0
2 years ago
The sales discounts account is a contra account to the​ ________ account
Gennadij [26K]
The purchases discount account or discounts received account.
6 0
3 years ago
Suppose the price of a gallon of ice cream rises from $4 to $5, and the price of a can of coffee rises from $2 to $2.50. If the
ExtremeBDS [4]

Answer:

a. less ice cream, less coffee

Explanation:

The percentage change in CPI is given by:

\%CPI = \frac{177-150}{150}=0.18

The percentage change in the prices of coffee and ice cream, respectively, are:

\%C = \frac{5-4}{4}=0.25\\\%I = \frac{2.50-2.00}{2.00}=0.25

Both coffee and ice cream had an increase in price above the CPI increase, which means that both goods are being sold above the equilibrium price and thus their demand is likely to fall.

People likely will buy less ice cream, less coffee

4 0
3 years ago
A government bond with a coupon rate of 7% makes semiannual coupon payments on January 15 and July 15 of each year. The Wall Str
WINSTONCH [101]

Answer:

invoice price (dirty price) = $1,004.13

Explanation:

semi-annual coupon = $1,000 x 7% x 1/2 = $35

clean price = $1,001.25

accrued interest = (Jan. 30 - Jan. 15) x $35 x 1/182 = $2.88

invoice price (dirty price) = clean price + accrued interest = $1,001.25 + $2.88 = $1,004.13

the dirty price or invoice price of a bond includes any accrued interest that the bond may have earned in the period between the last coupon payment and the transaction date.

7 0
3 years ago
at the end of 2018, river plate builders had two jobs still in process with a total balance of $132,200. what overhead rate is r
Ksju [112]

Answer: d. 80% of direct material cost

Explanation:

Overhead cost = Total costs - Direct material - Direct labor

= 132,200 - 25,000 - 32,000 - 12,500 - 17,100

= $45,600

Direct materials cost = 32,000 + 25,000

= $57,000

Percentage of Direct materials = Overhead/ Direct materials

= 45,600/57,000

= 80%

8 0
2 years ago
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