1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
katrin2010 [14]
3 years ago
5

The current risk-free rate of return in the economy is 1.5%. In addition, the market rate of return is currently 6%. Given that

a company’s expected return on common stock is 12.5%, what is the company’s systemic risk level (beta coefficient)?
Business
1 answer:
ludmilkaskok [199]3 years ago
7 0

Answer:

The company’s systemic risk level (beta coefficient) is 2.44%

Explanation:

According to Capm Expected Return of Stock = Risk Free Rate + Beta*(Market Return - Risk Free Rate)

Beta = (Expected Return of Stock - Risk freed Rate)/(Market return -Risk free Rate)

        = (12.5% - 1.5%)/(6% - 1.5%)

        =2.44 %

Therefore, The company’s systemic risk level (beta coefficient) is 2.44%

Systematic risk is the risk which affects all the stocks of the economy. It cannot be diversified away. Example interest rate and inflation in the economy. Beta represents systematic risk of the company.

You might be interested in
What is a co-operative risk sharing plan
finlep [7]
The co-operative risk sharing plan is that the person who you are working with can go "out" from the co-operative plan and share with another persons your plan.
3 0
3 years ago
Tutak Industries issued a $1,000 face value bond a number of years ago that will mature in eight years. Similar bonds are yieldi
s2008m [1.1K]

Answer: The coupon rate is 13%

Explanation:

We would first calculate the Coupon Payment and then later using the coupon payment we would compute the Coupon rate.

PV = \frac{FV}{(1+r)^{N} } + A [[\frac{1-\frac{1}{(1+r)^{N} } }{r} ]]

Where,

FV = $1,000

PV = $1,291.31

r = 8%

N = 8 Years

A = Coupon Payment

1291.31 = \frac{1000}{(1+0.08)^{8} } + A [\frac{1-\frac{1}{(1+0.08)^{8} } }{0.08} ]

Solve for A

A = 130.69

The coupon payment is $130

Coupon rate = (Coupon payment / Face value) x 100

                     = \frac{130}{1000} x 100

                     = 13 %

7 0
3 years ago
The ___________ must be the basis for a project cost estimate if you plan to create a cost baseline and use earned value managem
kogti [31]

The work breakdown structure must be the basis for a project cost estimate if you plan to create a cost baseline and use earned value management as part of monitoring and controlling costs.

Work can be made more manageable and approachable by using a common productivity strategy called task breaking. The Work Breakdown Structure (WBS), one of the most significant projects management papers, is the tool that applies this technique to projects. It does it on its own, integrating scope, cost, and schedule baselines to guarantee project plans are in sync.

The Work Breakdown Structure is a "deliverable-oriented hierarchical decomposition of the work to be completed by the project team," according to the PMI Project Management Book of Knowledge (PMBOK). WBS can be divided into two categories: deliverable-based and phase-based. The deliverable-based strategy is the most popular and preferred method. The Elements listed in the first Level of the WBS are the primary distinction between the two methodologies.

Learn more about project costs here brainly.com/question/15518327

#SPJ4

3 0
1 year ago
Listed below are five technical accounting terms. Each of the following statements describes one of these technical terms. For e
krok68 [10]

Answer:

a. Incremental analysis.

b. Sunk cost.

c. Relevant information.

d. Opportunity cost.

e. Joint products.

f. Out-of-pocket cost.

g. Split-off point.

Explanation:

a. Incremental analysis: examination of differences between costs to be incurred and revenue to be earned under different courses of action.

b. Sunk cost: a cost incurred in the past that cannot be changed as a result of future actions. Sunk cost can be defined as a cost or an amount of money that has been spent on something in the past and as such cannot be recovered.

c. Relevant information: costs and revenue that are expected to vary, depending on the course of action decided on. Hence, relevant cost are relevant for decision-making purposes but not sunk costs.

d. Opportunity cost: the benefit foregone by not pursuing an alternative course of action. Opportunity cost also known as the alternative forgone, can be defined as the value, profit or benefits given up by an individual or organization in order to choose or acquire something deemed significant at the time.

e. Joint products: products made from common raw materials and shared production processes.

f. Out-of-pocket cost: a cost yet to be incurred that will require future payment and may vary among alternative courses of action.

g. Split-off point: the point at which manufacturing costs are split equally between ending inventory and cost of goods sold. Thus, it give rise to joint products that emerge from the same raw materials and a shared manufacturing process.

6 0
3 years ago
What is the name given to the difference between the minimum and maximum values for a data set?
Setler [38]
The difference is called the range
4 0
3 years ago
Other questions:
  • QUESTION 2 of 10: A course that costs $500 will allow you to get a job that pays $2 more per hour than your current job. How man
    5·1 answer
  • Prowse Corporation is an oil well service company that measures its output by the number of wells serviced. The company has prov
    5·2 answers
  • Bond X is a premium bond making semiannual payments. The bond has a coupon rate of 9.6 percent, a YTM of 7.6 percent, and has 13
    9·1 answer
  • The balance sheet reports the A. financial position on a specific date. B. financial position for a specific period. C. results
    14·1 answer
  • For the purpose of process analysis, which of the following measures would be considered an appropriate flow unit for analyzing
    10·1 answer
  • Benkemel Corp., an industrial chemicals manufacturer in Noemern, has entered a foreign market. It now plans to establish a chemi
    12·1 answer
  • A logical way to allocate building maintenance costs to departments would be based on: Select one: A. Machine hours B. Number of
    8·1 answer
  • During 2019, Pepe Guardio purchases the following property for use in his calendar year-end manufacturing business:
    15·1 answer
  • Kelly has decided to start his own business giving sailing lessons. To purchase equipment for the business, Kelly withdrew $1,00
    13·1 answer
  • Company A wants to issue 60 bonds. Each bond has a 7% coupon bond with semi-annual payments, a par value of $1000, 30 years to m
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!