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ZanzabumX [31]
3 years ago
5

Mulherin's stock has a beta of 1.23, its required return is 11.75%, and the risk-free rate is 2.30%. What is the required rate o

f return on the market? (Hint: First find the market risk premium.) Do not round your intermediate calculations. a. 9.98% b. 7.69% c. 8.19% d. 12.38% e. 10.58%
Business
1 answer:
koban [17]3 years ago
3 0

Answer:

a. 9.98%

Explanation:

The computation of required rate of return is shown below:-

Required return= Risk - Free rate + Beta × (Market rate- Risk-free rate)

11.75% = 2.30% + 1.23 × (Market rate - 2.3%)

(11.75% - 2.30%) ÷ 1.23 = Market rate - 2.3%

Market rate = (11.75% - 2.30%) ÷ 1.23 + 2.3%

=9.98%

Therefore for computing the required rate of return on the market we simply applied the above formula.

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3 years ago
Complementary goods have a _______________ cross-price elasticity: as the price of one good increases, the demand for the second
Maru [420]

Answer:

negative

Explanation:

Complementary goods have a negative cross-price elasticity because the increase in price of one tends to a weak or fall in consumer demand of the second. For instance, a hike in petrol will lead to a  decrease in consumer demand for cars thereby giving rise to alternatives to these goods (most likely, there would be a surge in subway or rail patronage)

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3 years ago
Kelly Enterprises' stock currently sells for $35.25 per share. The dividend is projected to increase at a constant rate of 4.75%
Kitty [74]

Answer:

The answer is option e. $44.46

Explanation:

The stock's  expected price after 5 years can be expressed as;

FV=CV(1+RRR)^n

where;

FV=future value of stock/expected price after 5 years

CV=current price of stock

DGR=dividend growth rate

n=number of years

In our case;

FV=unknown

CV=$35.25 per share

DGW=4.75%=4.75/100=0.0475

n=5 years

replacing;

FV=35.25(1+0.0475)^5

FV=35.25(1.0475)^5

FV=44.46

5 0
3 years ago
According to the basic quantity equation of money, if price and output fall while velocity increases, then: Group of answer choi
sp2606 [1]

Answer:

The quantity of money will fall as well.

Explanation:

According to the quantity theory of money, money supply (M) and price level (P) in an economy are in direct proportion to one another.

In other words, the percentage change in price level is proportionate to the percentage change in Money Supplied.

The formula is given as:

M*V= P*T

where,  V = Velocity of money  and T = volume of the transactions.

Cheers!

8 0
3 years ago
What has the biggest impact on whether a 4 year university is affordable?
Yuki888 [10]

Answer: Federal aid

Explanation:

Federal aid helps students with the cost of tuition for everyone. It allows for students to keep out of major debt.

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3 years ago
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