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ololo11 [35]
3 years ago
8

Polly Khan is trying to calculate the current market rate given the following information: Investor’s have been requiring a 12%

annual return on Builtrite’s stock which has a beta of 2.0 and the current risk-free rate is 4%. What is the current market rate?
Business
1 answer:
Travka [436]3 years ago
8 0

Answer:

The current market rate is 8%

Explanation:

The market rate is the return on market or the market portfolio. To calculate the market rate (rM) we will use the CAPM equation which is used to calculate the required rate of return on a stock or portfolio. The formula for required rate of return under CAPM is,

r = rRF + Beta * (rM - rRF)

Where,

  • rRF is the risk free rate
  • rM is the market rate

We already know the value of r, rRF and Beta. We will input these values in the above equation to calculate the market rate.

0.12 = 0.04 + 2 * (rM - 0.04)

0.12 - 0.04 = 2 * rM - 0.08

0.08 + 0.08 = 2 * rM

0.16 / 2 = rM

rM = 0.08 or 8%

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Which of the following would cause the supply curve to shift to the right?
AnnZ [28]

Answer:

Technology improves production.

Explanation:

Supply refers to the quantity of goods and services produced and offered to the market for sale.

There are several factors that could cause the supply curve to shift to the right, one of which is technology improves production. An improvement in technology will phase out manual or slow process of production hence shifts supply curve to the right.

When government increases tax on a business, if will affect the income that should have accrued to the business hence supply curve inward. An increase in input prices will affect production cost thereby shifting supply to the left. Also when there is a decline in the numbers of consumers, it will shift supply curve inward because it is these consumers that will purchase whatever that is produced and supplied to the market.

5 0
3 years ago
In which of the following areas would it cost the least amount of money to build a barn?
Nana76 [90]
The areas which will cost  the least amount of money to build a barn would be: Plains
Plains have the perfect amount of woods, water, and grass that will support the existence of a barn. Most barn animals cannot live in beach or mountains, so those options could be eliminated.
We need to spend more money to create space in forest if we want to build a barn there, so it could be eliminated too.

6 0
3 years ago
1. Friedman distinguishes between the two concepts that (a) businesses really do act in ways to maximize profit and (b) business
S_A_V [24]

Explanation:

Friedman defends the position that companies have a social responsibility to act to maximize profit, in the sense that, the primary function of companies is to generate profit. The author goes against the growing opinions in society that companies must have social responsibility, that is, they need to create a positive and sensitive corporate image to please political and society interests and counter or even soften the words and actions its central purpose, which is profit generation. For him, social responsibility cannot be politicized in order to be an obligation of companies, as it limits freedom and interests arising from the business.

4 0
2 years ago
Ornaments, Inc., is an all-equity firm with a total market value of $663,000 and 32,800 shares of stock outstanding. Management
Dvinal [7]

EPS = $1.44 (after rounding off)

<u>Explanation:</u>

<u>The calculation of Earnings per share is as follows: </u>

Particulars                                   Amount

Earnings before interest and tax = 71325

Less: amount of interest = 0

Earnings before tax = $71325

Less : the amount of tax ( 34 percent) = 2425.05

Net income = $47074.5

The number of shares given = 32,800

The formula of calculating the earning per share is = Net income divided by the number of the shares of a company

Thus, EPS = $47074.5 divided by 32,800 = $1.44 (rounded oof)

7 0
2 years ago
Daguio Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated
valkas [14]

Answer:

The correct answer is D.

Explanation:

Giving the following information:

Daguio Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $305,040. At the end of the year, actual direct labor-hours for the year were 16,800 hours, manufacturing overhead for the year was underapplied by $16,800, and the actual manufacturing overhead was $299,040.

under allocation= real MOH - allocated MOH

16,800= 299,040 -  allocated MOH

282,240= allocated MOH

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

282,240= Estimated manufacturing overhead rate*16,800

16.8=Estimated manufacturing overhead rate

8 0
2 years ago
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