1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Verizon [17]
3 years ago
7

Suppose that borrowing is restricted so that the zero-beta version of the CAPM holds. The expected return on the market portfoli

o is 14%, and on the zero-beta portfolio it is 7%. What is the expected return on a portfolio with a beta of 0.5?
Business
1 answer:
Delvig [45]3 years ago
4 0

Answer:

10.5%

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

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

where,

Risk free rate of return = 7%

Market rate of return = 14%

And, the beta is 0.5

So the expected return is

= 7% + 0.5 × (14% - 7%)

= 7% + 0.5 × 7%

= 7% + 3.5%

= 10.5%

You might be interested in
What are things you can do to manage the risks in your life to reduce any financial losses?
meriva
Spend carefully use discounts monitor your spending create list on how much you spend etc.
5 0
3 years ago
Read 2 more answers
Jon needed to purchase new tires for his SUV. He consulted Consumer Reports to see how the various brands were rated. Jon consul
ololo11 [35]

Answer:

Independent sources of information

Explanation:

Magazines, consumer groups, and government agencies all represent independent sources of information.

7 0
3 years ago
When several alternative investment proposals of the same amount are being considered, the one with the largest net present valu
Likurg_2 [28]

Answer:

The answer is c. present value index

Explanation:

Present value index is the ratio decided by dividing net present value of the project by its require initial net cash outflows.

Once having constraint on selecting investment with positive NPV to be made due to lack of fund, a firm's usually use Present value index for further decision making.

The investment with higher present value index shows that it generates more net cash flow or in other words, more efficient and requires less initial cash outflow, and thus usually be chosen over the other ones with lower present value index.

4 0
3 years ago
On 1/29, General Electric bought supplies in the amount of $1,500. What account is debited and what account is credited in the r
alexdok [17]

Answer: Debit Supplies

Credit Cash

Credit Accounts payable.

Explanation:

The journal entry is an act of making records of the transactions in an organization which shows the debit and credit balances of the company.

Based on the information given, since General Electric bought supplies in the amount of $1,500, the journal entry will be:

Debit Supply $1500

Credit Cash / Accounts Payable $1500

4 0
2 years ago
Suppose a country without any international trade opens its borders to international trade. after specialization how will its lo
Zanzabum
<span>Opening up to international trade would lead a country to increasing its production and specialization of goods. For example, if a country opens international trade and some factories are making a household appliance, the instructions would need to be in the trade countries languages as well as the native language. The number of household appliances made would need to be increased to meet the growing need.</span>
3 0
3 years ago
Other questions:
  • Comans Corporation has two production departments, Milling and Customizing. The company uses a job-order costing system and comp
    10·1 answer
  • Johnson Inc. purchases 21% of the voting stock of XYZ Company. This is sufficient to give Johnson significant influence over XYZ
    14·1 answer
  • Give a fun advertisement for ice cream. Choose from 15 to 30 flavors. You don’t have to mention the flavors just mention how man
    5·1 answer
  • While noreen was driving down the highway, she saw two cars on the side of the road. she noticed that no one was hurt and that n
    14·1 answer
  • Which of the following is TRUE about a promissory note? It makes the borrower personally liable for the debt. It may not be exec
    12·1 answer
  • The management of Computer Rescues, Inc. finalized the company's action plan for increasing its market share over the next few y
    7·1 answer
  • Why would a bank be more likely to make a loan to someone with a FICO score of 750 rather than someone with a score of 500? a) T
    12·2 answers
  • HELPPP PLEASE !
    13·1 answer
  • Did yall know Kanye West was running for president?
    10·1 answer
  • As chief financial officer, you want to send the fourth quarter profit/loss spreadsheets to the president of the company. How ca
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!