Answer:
1.
r market = 0.12 or 12%
2.
r stock = 0.12 or 12%
3.
r Stock = 0.169 or 16.9%
Explanation:
The required rate of return can be calculated using the CAPM or Capital asset pricing model equation. The formula for required rate of return under this model is,
r = rRF + Beta * rpM
Where,
- rRF is the risk free rate
- rpM is the risk premium on market
- r represents the required rate of return
1.
The beta of the market is always considered to be 1. Thus, the required rate of return on market would be,
r market = 0.05 + 1 * 0.07
r market = 0.12 or 12%
2.
For a stock whose beta is 1.0, the required rate of return would be same as that for market. So, the required rate of return for a stock with a beta of 1.0 is,
r Stock = 0.05 + 1 * 0.07
r Stock = 0.12 or 12%
3.
The required rate of return for a stock with a beta of 1.7 is,
r Stock = 0.05 + 1.7 * 0.07
r Stock = 0.169 or 16.9%
Answer:
The order in which the following budgets are generally prepared are as arranged below:
1. Sales budget
2. Production budget
3. Material purchases budget
4. Budgeted income statement
In an attempt to expatiate the decision above. We must observe that income statement starts with revenue. Similarly here, the budget will starts with sales. The revenue section is followed by production budget which from which various budgets like material, direct labor and overhead budget are prepared from. After the Production budget, follow the Material purchase budget, then Budgeted Income Statement
Answer: C. The beta coefficient of a stock is normally found by regressing past returns on a stock against past market returns. One could also construct a scatter diagram of returns on the stock versus those on the market, estimate the slope of the line of best fit, and use it as beta. However, this historical beta may differ from the beta that exists in the future.
Explanation:
The beta coefficient is used by an economic entity to measure how volatile an individual stock is when such stock is being compared to the market's systematic risk.
Of the options given in the question, the correct answer is option C which states that "C. The beta coefficient of a stock is normally found by regressing past returns on a stock against past market returns. One could also construct a scatter diagram of returns on the stock versus those on the market, estimate the slope of the line of best fit, and use it as beta. However, this historical beta may differ from the beta that exists in the future"
Answer:
it take 29.23 years, my salary to double.
Explanation:
To make the salary double I have to increase the value of salary by 100%. If inflation rate is 2.4 percent per year and salary increase the same rate the time period to make it double can be calculated as follow.
As every year 2.4% has compounding effect, so we will use compounding formula to solve this problem.
Target value = Existing value ( 1 + growth rate )^time period
200% = 100% ( 1 + 2.4% )^n
2 = 1 ( 1 + 0.024 )^n
2 = 1 ( 1.024 )^n
2 = 1.024^n
Taking log on both sides to solve the n
Log 2 = n Log 1.024
n = Log 2 / Log 1.024
n = 29.23 years
I will take 29.23 year to double the salary
Answer: A. An automobile company promotes small family cars and sports utility vehicles to a specific demographic.
Explanation:
Differentiated marketing is a form of marketing that occurs when the advertisement that is done by a particular company appeals to some particular target audiences or segments. Thus is usually done by the company to get ire customers and also enhance the brand awareness.
In this case, the activity that is an example of differentiated marketing will be option A. "An automobile company promotes small family cars and sports utility vehicles to a specific demographic".
