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
Yakvenalex [24]
4 years ago
6

Linke Motors has a beta of 1.30, the T-bill rate is 3.00%, and the T-bond rate is 6.5%. The annual return on the stock market du

ring the past 3 years was 15.00%, but investors expect the annual future stock market return to be 10.00%. Based on the SML, what is the firm's required return? Do not round your intermediate calculations. a. 12.71% b. 10.50% c. 11.05% d. 13.48% e. 10.17%
Business
1 answer:
elena-14-01-66 [18.8K]4 years ago
8 0

Answer:

c. 11.05%

Explanation:

The computation of firm's required return is shown below:-

First we need to find out the Market Risk Premium for computing the firm's required return.

Using CAPM, we calculate Market Risk Premium

Expected Future Market Rate of Return = Risk Free Rate on T-Bond + Beta of the Market × Market Risk Premium

10% = 6.5% + 1 × Market Risk Premium

Market Risk Premium = (10% - 6.5%) ÷ 1

= 3.5%

Required Rate of Return = Risk Free Rate + Beta of the Stock × Market Risk Premium

= 6.5% + (1 + 3.00%) × 3.5%

= 6.5% + 1.30 × 3.5%

= 11.05%

You might be interested in
determining what items or products you need is the first step in purchasing. this is called a purchasing .
Serga [27]

Identification of the need is the first step for purchasing process.

<h3>Is a buying situation in which the customer purchases a product or service for the first time?</h3>

Modified rebuy: A business shopping for scenario in which the buyer needs to alter product specifications, prices, terms, or suppliers. New task: A enterprise shopping for situation in which the consumer purchases a product or carrier for the first time.

<h3>What are the 3 buying process?</h3>

It is the journey or shopping for manner that customers go through to grow to be conscious of, evaluate, and buy a new product or service, and it consists of three degrees that make up the inbound advertising framework: awareness, consideration, and decision.

Learn more about purchasing process here:

<h3>brainly.com/question/1489991</h3><h3>#SPJ4</h3>
3 0
1 year ago
Long Construction Company uses the percentage-of-completion method of accounting for long-term construction contracts. During 20
LUCKY_DIMON [66]

Answer:

$400 million less ($176+$84)=$14 million

Explanation:

the percentage of completion method of accounting is more like of income statement because it is used to assess the companys performance and financial position

8 0
3 years ago
A building manager hires a painting company to paint the common areas in the building. the manager will supply all of the paint.
OlgaM077 [116]
Your answer would be ,,, 
 a. true
5 0
3 years ago
What education do you need for high school
LenaWriter [7]

Answer:

To teach High School, you need a Bachelors degree.

To graduate it, you have to pass English/Language Arts · Mathematics · Science · Social Studies/History · Foreign Languages · Physical Education

5 0
3 years ago
Read 2 more answers
William and Charlotte Collins divorced in November of year 1. William moved out and Charlotte remained in their house with their
anzhelika [568]

Answer: B. Charlotte

Explanation:

Preference is given to people that live with the dependent so this puts William at the least priority because he doesn't live with Autumn thereby leaving Charlotte and her mother.

Preference is then given to the biological parents of the dependent which means that Diana is has second priority. Charlotte is therefore the the most preferred to claim her daughter as a dependent which would allow her greater tax deductions.

5 0
3 years ago
Other questions:
  • Packages arrive at a facility at a rate of 30 per hour and are processed continuously at a rate of 25 per hour. The facility is
    8·1 answer
  • Bank capital has both benefits and costs for the bank owners. Higher bank capital ________ the likelihood of bankruptcy, but hig
    11·1 answer
  • "when leased computing resources can be increased or decreased​ dynamically, they are said to be​ ________."
    15·1 answer
  • Chris purchased a 10 year 100 par value bond where 6% coupons are paid semiannually. Cheryl purchased a 100 par value bond where
    11·1 answer
  • Kangaroo Autos is offering free credit on a new $10,000 car. You pay $1,000 down and then $300 a month for the next 30 months. T
    13·2 answers
  • The Square Box is considering two independent projects, both of which have an initial cost of $18,000. The cash inflows of Proje
    5·1 answer
  • Why is investing in a mutual fund less risky than investing in a particular company’s stock?
    10·1 answer
  • Red Co. recorded a right-of-use asset of $100,000 in a 10-year finance lease. Payments of $16,275 are made annually at the end o
    10·1 answer
  • Which of the following priority rule will minimize the average flow time of jobs and also perform well in other measures such as
    9·1 answer
  • you just saw a video advertisement that shows an interview with a celebrity who says her life changed for the better when she st
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!