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Vesnalui [34]
3 years ago
12

The risk-free rate is 6% and the expected rate of return on the market portfolio is 13%. a. Calculate the required rate of retur

n on a security with a beta of 1.25. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Required return 22.25 % b. If the security is expected to return 16%, is it overpriced or underpriced
Business
1 answer:
Andreyy893 years ago
3 0

Answer:

a. 14.75%

b. Under priced

Explanation:

The computation for the required rate of return is shown below:

a. Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

= 6% + 1.25 × (13% - 6%)

= 6% + 1.25 × 7%

= 6% + 8.75%

= 14.75%

b. As the required rate of return comes 14.75% and the required return is 16% so it is under priced as expected return is more than the required return

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Consumers in Georgia pay twice as much for avocados as they do for peaches. However, avocados and peaches are equally priced in
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Answer: Explanation:

The marginal rate of substitution of peaches for avocados is the maximum amount of avocados that a  person is willing to give up to obtain one additional peach. When consumers maximize utility, they set their MRS equal  to the price ratio,  Pp/PA

where ,

P p  is the price of a peach and

PA is the price of an avocado.

In Georgia,  avocados cost twice as much as peaches, so the price ratio is ½ , but in California, the prices are the  same, so the price ratio is 1. Therefore, when consumers are maximizing utility (assuming they buy  positive amounts of both goods), the marginal rates of substitution will not be the same for consumers  in both states. Consumers in California will have an MRS that is twice as large as consumers in Georgia.

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3 years ago
Most companies have the need for a _________ department that can quickly repair and troubleshoot systems, as well as provide tec
iragen [17]

Answer:

IT Department

Explanation:

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They help the employees and provide them with technical support, since now a days, companies are 50% based on technology and any trouble can cause harm to the organization.

4 0
3 years ago
Each day, you are faced with choices. You have to decide how to use your resources. For example, should you use some of your all
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7 0
3 years ago
Sweet Company’s outstanding stock consists of 1,000 shares of noncumulative 5% preferred stock with a $100 par value and 10,000
avanturin [10]

Answer:

Option (D) is correct.

Explanation:

Preferred dividend per year:

= (Outstanding preferred stock × Par value of preferred stock ) × 5% preferred stock

= (1,000 × $100) × 5%

= ($100,000) × 5%

= $5,000

Any balance left over would be paid to common stockholders.

Year 1:

Paid to preferred stockholders = $2,000

Paid to common stockholders = 0

Year 2:

Paid to preferred stockholders = $5,000

Paid to common stockholders = ($6,000 - $5,000)

                                                  = $1,000

Year 3:

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Therefore,

Total amount of dividends paid to preferred Shareholders:

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= $0 + $1,000 + $27,000

= $28,000

5 0
3 years ago
82% of companies shop their products by truck. 47% of companies ship their product by rail 40% of companies shop by truck and ra
hram777 [196]

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3 0
2 years ago
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