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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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Answer: he will owe $135

Explanation:

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3 years ago
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In a small manufacturing facility, one welder is needed for every 200 hours of machine-hours or fewer in a month. The welder is
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$16250

Explanation:

For every 200 hours of needed work, $2500 must be paid. We divide the amount of hours needed for 200 to obtain the amount of times that $2500 are paid. Multiplying this number by $2500 we obtain the total expense gor salaried employees.

frac{{1300}{200}}x2500

6 0
3 years ago
If a firm has a required rate of return equal to the ROE, Group of answer choices the firm can increase market price and P/E by
mario62 [17]

Answer:

the amount of earnings retained by the firm does not affect market price or the P/E

Explanation:

A rate of return refers to the net gain or loss of an investment over a particular time period which is typically a year. It is expressed as a percentage of the investment's initial cost.

The rate of return is referred to as the annual return if the time period is typically a year.

If a firm has a required rate of return equal to the ROE, <u>the amount of earnings retained by the firm does not affect market price or the P/E</u>

8 0
4 years ago
Product or service offered, how much,<br> at what price
Bogdan [553]

Answer:

Realizing the contrast among cost and worth can expand benefit: the expense of your item or administration is the sum you spend to deliver it. the cost is your money related award for giving the item or administration. the worth is the thing that your client accepts the item or administration is worth to them

Explanation:

.

6 0
3 years ago
Betty and Karen have been hired to paint the houses in a new development. Working together, the women can paint a house in two-t
Aliun [14]

Answer:

6 hours

Explanation:

Let k = time it takes Karen to paint the house alone

then  according to the question,

(2/3)(k)(1/k + 1/12) = 1

⇒(2k/3)(1/k + 1/12) = 1

⇒(2k)(1/k + 1/12) = 3

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therefore Karen takes 6 hours to complete the Task.

8 0
3 years ago
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