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Sergio [31]
3 years ago
10

If an investor's aversion to risk increased, would the risk premium on a high beta stock increase by more or less than that of a

low-beta stock? Explain.
Business
1 answer:
8_murik_8 [283]3 years ago
8 0

Answer:

risk premium increases by more of the low - beta stock

A risk averse investor is an investor that avoids risk. if risk aversion increases, it means that the investor is more wary of risky investment.

Beta measures the volatility of a portfolio. the higher the volatility, the more risky the portfolio is.

risk premium measures the rate of return in excess of the risk free rate.

According to CAPM :

risk free rate + (beta x stock risk premium)

Beta is a multiplier of stock risk premium, so the higher the beta, the more there would be an increase in the stock risk premium

If a risk averse investor invests in a high beta stock, he would want extra or higher compensation for holding such a volatile stock. this extra compensation would be in the form of a higher risk premium.

Explanation:

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Crossroads Mall had 100,000 outstanding shares of common stock. On June 16, 2018, Crossroads repurchased 20,000 shares of its ow
timofeeve [1]

Answer:

The answer is c. Increase in assests and increase in stockholder's equity.

Explanation:

The accounting entries Crossroads Mall will have for the sell of repurchased shares as followed:

Dr Cash                                                                           280,000

Dr Paid-up capital and/or Retained Earning                 20,000

Cr Common share                                                          300,000

( further calculation notes: sold of 10,000 repurchased shares at $28 brings about 280,000 in cash; while common shares will be recorded at the repurchased price, that is : 30 x 10,000)

Thus, the net effect of the sale of repurchased shares will be the Increase in Cash ( assets) of $280,000 and the Increase in Stock Equity of the same amount, that is, $280,000.

7 0
3 years ago
The following information is available for a company's utility cost for operating its machines over the last four months. Month
jeka94

Answer:

The Estimated variable cost per machine hour for utilities is $2.50

Explanation:

High low method segregates the variable cost and fixed from the total cost using highest activity data and lowest activity data.

According to given data

Month   Machine hours   Utility cost

January         900               $5,450

February       1,800             $6,900

March            2,400            $8,100

April               600               $3,600

Using formula of High Low method

Variable cost = ( Cost of Highest activity - Cost of lowest activity ) / ( Highest activity - Lowest activity )

Variable cost = ( $8,100 - $3,600 ) / ( 2,400 - 600 )

Variable cost = $4,500 / 1800

Variable cost = $2.5

Fixed Cost = $8,100 - ( 2,400 x 2.5 ) = $8,100 - $6,000 = $2,100

3 0
3 years ago
Rafi offers a tour of Bay Harbor aboard his sailboat, Sea Siren, to Tiara’s Travel Group for $500. Referring to the prices for s
Anna11 [10]

Answer:

Will be terminated

Explanation:

Given:

Rafi's offers for the tour of Bay Harbor = $500

Tiara’s willing to pay = $400

Argue:

Tiara’s Travel Group is not willing to pay the price that Rafi wants to get, Tiara’s Travel Group wants to bow down the price below that value, so Tiara’s Travel Group will reject Rafi's offer.

7 0
4 years ago
1 Consumption of Fixed Capital $438 2 Taxes on Production and Imports 326 3 Compensation of Employees 2,347 4 Rents 14 5 Interes
Rufina [12.5K]

Answer:

1, 12, and 13

Explanation:

As we know that

National income = NNP at FC

And,  

GDP = GDP at MP

Now as we have to determine the GDP at MP from the national income so here considered the depreciation

So,

NNP at FC + depreciation expense -net factor income from abroad = GDP at FC

And, the statistical discrepancy is determined as gross domestic product subtract gross domestic income.

Hence, the above is the answer

3 0
3 years ago
If taco bell decides to produce more tacos and fewer burritos, taco bell is answering the ________ part of one of the two big ec
Mashcka [7]
Peoples part or like another word that stand for the people word like economic or idk hope this help
8 0
3 years ago
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