Answer:
Rate of return a firm must earn on its existing assets to maintain the current value of its stock.
Explanation:
The expected return is calculated on cost of capital, and that the cost of capital is weighted average cost of capital.
This is because weighted average cost of capital is the cost of capital which is based on the overall risk and weights of capital in the total capital of the company.
When the net return on total capital is less than weighted average cost of capital it means the company is not able to meet the total cost of capital and accordingly, the company faces some sort of losses.
Therefore, minimum return shall be equal to weighted average cost of capital.
Answer:
equal 0.
Explanation:
If both stocks are perfectly negatively correlated, then the standard deviation will always be 0. For example, if the variance of stock A is -0.5, then the variance of stock B will be 0.5, so the standard deviation will be 0. The variance of each stock will cancel the variance of the other one.
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