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3 years ago

A company's beta (from the CAPM) is affected by its capital structure. a. True b. False

Business

1 answer:

liberstina [14]3 years ago

3 0

Answer:

True

Explanation:

We know that

Risk-free rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

where,

The Market rate of return - Risk-free rate of return) is also known as the market risk premium and the same is applied.

Plus we know that the capital structure is composed of debt and equity. If the debt is increasing, the market risk is also increased, and therefore the volatility is also increasing.

The beta is the volatility which can affect due to market movements so it automatically affect the capital structure

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Read 2 more answers

Radison Enterprises sells a product for $102 per unit. The variable cost is $58 per unit, while fixed costs are $758,912. Determ

Ksenya-84 [330]

Answer:

Results are below.

Explanation:

Giving the following information:

Radison Enterprises sells a product for $102 per unit.

The variable cost is $58 per unit, while fixed costs are $758,912.

To calculate the break-even point in units, we need to use the following formula:

Break-even point in units= fixed costs/ contribution margin per unit

Break-even point in units= 758,912 / (102 - 58)

Break-even point in units= 17,248 units

Now, the selling price is $107:

Break-even point in units= 758,912 / (107 - 58)

Break-even point in units= 15,488 units

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3 years ago