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
Harman [31]
3 years ago
13

Porter Inc's stock has an expected return of 10.75%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 5%, what is

the expected market risk premium
Business
1 answer:
posledela3 years ago
8 0

Answer:

the expected market risk premium is 4.6%

Explanation:

The computation of the expected market risk premium is shown below:

As we know that

Expected rate of return = Risk free rate of return + beta × market risk premium

10.75% = 5% + 1.25 × market risk premium

5.75% = 1.25  × market risk premium

So, the market risk premium is

= 5.75% ÷ 1.25

= 4.6%

hence, the expected market risk premium is 4.6%

we simply applied the above formula

You might be interested in
Assuming the correlation between the annual returns on the two portfolios is indeed zero, what would be the optimal asset alloca
den301095 [7]
Since you provide no relevant number, 

In order to find out the optimal Asset allocation, you should find out which investment opportunities that Provide the highest return with the lowest standard deviation in the risk department

hope this helps
4 0
3 years ago
Kyle has $2,200 in cash received for high school graduation gifts from various relatives. He wants to invest it in a certificate
Darina [25.2K]

Answer:

Kyle will have in five years from now 2,501.26 dollars for his investment on certificate of deposit.

Explanation:

We need to calcualte the future value of a lump sum:

Principal \: (1+ r)^{time} = Amount

Principal $ 2,200

time 5 years

rate 2.6% = 2.6/100 = 0.02600

2200 \: (1+ 0.026)^{5} = Amount

Amount 2,501.26

7 0
3 years ago
The problem now is to decide which contractor to choose.B has indicated that for another $20 million he could do the job in 18 m
Ede4ka [16]

Question: The question is incomplete. See the full question below and the answer.

You are an up-and-coming developer in downtown Seattle and are interested in constructing a building on a site you own. You have collected four bids from prospective contractors. The bids include both a cost ($millions) and time to completion (months):

Contractor    Cost           Time

A                   100             20

B                    80              25

C                    79               28

D                   82                26

The problem now is to decide which contractor to choose. B has indicated that for another $20 million, he could do the job in 18 months, and you have said that you would be indifferent between that bid and the original proposal. In talking with C, you have indicated that you would just as soon pay her an extra $million if she could get the job done in 26 months. Who gets the job? Explain your reasoning. (It may be convenient to plot the four alternatives on a graph.)

Answer:

See the explanation for the answer and find attached of the graph.

Explanation:

So we draw a regression line of Time vs Cost and best fit a curve based on the data given, given in the above figure. The four alternatives are marked in the figure as well. Our main objective is to reduce both time and cost, but that might not be possible So the best thing would be to look for alternatives which lie below the line. If C gets an extra million, then that point would come below the regression line, and it would be a better alternative than D, because for the same time we are getting the job done at a cheaper cost.

Also if B is paid extra 20 million, that point also comes below the regression line, and hence will be a better alternative than A because for the same cost again we are getting the job done earlier. We need to choose between B and C. Now in order to optimise both cost and time, we need to choose a point close to the middle point of the regression line segment in 1st quadrant. We see that C is much more closer to the middle point and hence seems like a better option.

So we choose C as our contractor if we consider B's alternative bid, but if we do not consider B's alternative bid and stick to the original one, we choose B as our contractor.

8 0
3 years ago
If an unprofitable segment is eliminated it is impossible for net income to decrease. it is impossible for net income to increas
DiKsa [7]

Answer:

The correct answer is variable expense will also be eliminated of the segment which got eliminated.

Explanation:

The segment in the business which is not profitable anymore, then that segment would be eliminated or removed, which will result in net income will always increase or rise. And the variable costs of that eliminated segment will be absorbed through other segments or will be eliminated.

Though the segment is removed, the fixed costs which is allocated to the segment will be covered still.

So, when the segment is eliminated, then the variable expense of that segment would be eliminated.

6 0
3 years ago
your grandparents would like to establish a trust fund that will pay you and your heirs $115,000 per year forever with the first
Mademuasel [1]

They must deposit $5,227,272.73 if the trust fund will pay $115,000 per year and the trust fund earns an annual return of 2.2%.

The amount to be deposited today can be considered as the present value that can be described as the current figure of a future sum of money or stream of cash flows provided a specified rate of return.

The amount to be deposited or in other words, the present value can be calculated by using the formula for present value;

PV = Annual cash flow / Interest rate

Substituting the given values of annual cash flow and interest rate in this formula;

PV = $115,000 / 0.022

PV = $5,227,272.73

Therefore, the amount that has to be deposited today by them is calculated to be $5,227,272.73

To learn more about the present value; click here:

brainly.com/question/20813161

#SPJ4

4 0
1 year ago
Other questions:
  • Morrow Inc. uses the percentage of credit sales method of estimating doubtful accounts. The Allowance for Doubtful Accounts has
    9·1 answer
  • A special agreement between the lender and the borrower to delay a foreclosure is known as what...? Lis Pendens Postponement For
    8·1 answer
  • Support functions manage and improve the efficiency of an organization's conversion processes so that more value is created.
    5·1 answer
  • Copy equipment was acquired at the beginning of the year at a cost of $25,500 that has an estimated residual value of $2,300 and
    14·1 answer
  • Sterling, Inc. is a manufacturer of state-of-the-art computers. For the past ten years, Sterling has acquired all of its microch
    15·1 answer
  • During 2021, its first year of operations, Pave Construction provides services on account of $124,000. By the end of 2021, cash
    13·1 answer
  • If the potential employer is a candle-making company, _____ would be one of the employer’s raw materials.
    5·1 answer
  • In the context of employee engagement, it is observed that the highly engaged employees feel a deep connection to their company.
    10·1 answer
  • analysis, formulation, and implementation are the pillars of research and knowledge about strategic management. this activity is
    12·1 answer
  • which retail executive supervises a group of buyers and is responsible for the merchandising activities of a related group of sa
    15·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!