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3 years ago

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:

1 answer:

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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When an economy is temporarily operating at an output that is beyond its full-employment rate it means that

MrMuchimi

It means that excess demand in resource markets will lead to higher resource prices, which will increase costs and direct the economy toward full employment.

Explanation:

An economy’s full employment output is the highest production level when all available resources are used efficiently. It equals the highest level of production an economy can sustain for the long-run. It is also referred to as the full employment production which results in long term supply of the finished good.

When there is increased demand then eventually there will be an increase in the price and also costs of the production which leads the economy towards the full employment output as it is a sustainable output.

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3 years ago

When a local walmart is open 7 days a week, 24 hours a day, which form of utility is it providing to customers?

Vladimir [108]

Answer: TIME UTILITY

When a local Walmart is open 7 days a week, 24 hours a day, it is providing the customers with time utility. Economic utility includes Form utility, Time utility, Place utility and Possession utility. Time utility refers to the availability of products when the customer needs them. In this utility, the company chooses the hours and days when products and services are available to the customers according to the needs of the customers.

6 0

3 years ago

External costs are those costs: Multiple Choice that fall directly on an economic decision maker. that fall indirectly on an eco

Maksim231197 [3]

Answer:

The correct option is D

Explanation:

External cost is the form of an expense which occur while consuming or producing the goods and services that imposes the cost or expense ( with negative effect) on the third party.

If there are the external costs while consuming the good, then the social costs would be greater than the private cost.

So, the external cost is defined as the cost that is imposed without any compensation on someone other than the person who cause or incur it.

7 0

3 years ago

Lucas Diving Supplies Company, in its first year of business, had labor costs of $57,000, overhead costs of $88,000, materials p

WARRIOR [948]

Answer:

$162,000

Explanation:

The amount of cost of goods manufactured is computed as

= Labor cost + Direct materials purchased + overhead costs - ending balance of materials - ending balance of work in process

= $57,000 + $25,000 + $88,000 - $3,000 - $5,000

= $162,000

Hence, the cost of goods manufactured is $162,000

7 0

3 years ago

Ice Cream Corporation uses the weighted-average method in its process costing system. Data concerning the first processing depar

Svetllana [295]

Answer:

Ice Cream Corporation

The cost per equivalent unit for materials for the month in the first processing department is closest to: __________

= $17.97.

Explanation:

a) Data and Calculations:

Units Materials Conversion

Beginning work in process inventory 900 $13,000 $5,100

Degree of completion 75% 20%

Units started into production 9,600

Total units in production 10,500

Units completed and transferred 8,500 100% 100%

Ending work in process inventory 2,000 90% 30%

Units Materials Conversion

Beginning work in process inventory 900 $13,000 $5,100

Costs added during the month $172,100 $242,100

Total production costs for the month $185,100 $247,200

Equivalent units of production:

Units Materials Conversion

Units completed and transferred 8,500 8,500 (100%) 8,500 (100%)

Ending work in process inventory 2,000 1,800 (90%) 600 (30%)

Total equivalent units 10,300 9,100

Cost per equivalent unit:

Materials Conversion

Total production costs $185,100 $247,200

Total equivalent units 10,300 9,100

Cost per equivalent unit $17.97 $27.16

6 0

2 years ago