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geniusboy [140]
4 years ago
10

Porter Plumbing's stock had a required return of 11.75% last year, when the risk-free rate was 5.50% and the market risk premium

was 4.75%. Then an increase in investor risk aversion caused the market risk premium to rise by 2%. The risk-free rate and the firm's beta remain unchanged. What is the company's new required rate of return? (Hint: First calculate the beta, then find the required return.)
Business
1 answer:
Anni [7]4 years ago
7 0

Answer:

The answer is: Porter Plumbing's stock new rate of return is 14.38%

Explanation:

First we calculate beta:

beta = (stock's rate of return - risk free rate) / market rate of return

beta = 6.25% / 4.75% = 1.32

If beta remained the same (1.32% and the market rate of return increased by 2%, then to find the new value for Porter's stock (P):

1.32 = (P - risk free rate) / 6.75%    

P - risk free rate = 1.32 x 6.75% = 8.88%

P = 8.88% + risk free rate            

P = 8.88% + 5.50% = 14.38%    

​

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Explanation:

In mathematics and statistics, the arithmetic mean, or simply the mean or average is the sum of a collection of numbers divided by the count of numbers in the collection.

A sample mean therefore is the average of the sum of a collection of samples divided by the count of numbers in the collection.  Simply, the sample mean is the average of all the measurements in the sample.

6 0
3 years ago
Explain how productivity, economic growth, and future standards of living are influenced by investment in factories, machinery,
aliina [53]

Answer:

<em>There is a direct relation of the productivity, economic growth, and future standards of living with the investment in factories, machinery, new  technology, and the health, education, and training of people.</em>

Explanation:

  1. <u><em>Relation with the investment in factories, machinery, new  technology </em></u>

If there is larger investment in factories, machinery and new technology (fixed assets investing) then there will be more production which will require more labour. With more production, there will be more consumption thereby. The profits of the enterprises will increase and hence more taxes will be paid to the government, labour income in the economy will rise and hence there will be more consumption thereby. More taxes to the government will imply more public spending by the government.

So, saying all of that <em>productivity, economic growth, and future standards of living </em>will be in a much better place with the increase in fixed assets investing and vice-versa.

     2. <u><em>Relation with the investment in health, education, and training of</em></u><em> </em><u><em>people</em></u>

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3 0
3 years ago
Which of the following is one of the first things you should do when preparing to present yourself to employers?
GrogVix [38]
You did not provide a list but I feel you should dress professionally and be prepared to talk in a professional manner. I hope this helps. :)
5 0
3 years ago
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kumpel [21]

Answer:

5.34 months

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Payback period = amount invested / cash flows

$5000 / $ 935 = 5.34 months

I hope my answer helps you

7 0
3 years ago
If Alex deposits $1,000 from her paycheck into her checking account and, at the same time, increases her credit card balance by
Marina86 [1]

Answer:

option (A) -$500; decreases by $500

Explanation:

Data provided in the question:

Amount deposited = $1,000

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