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Over [174]
3 years ago
10

Calculate the required rate of return for Mercury Inc., assuming that investors expect a 5% rate of inflation in the future. The

real risk-free rate is 3% and the market risk premium is 5%. Mercury has a beta of 2.0, and its realized rate of return has averaged 15% over the last 5 years. a. 20% b. 17% c. 18% d. 16% e. 15%
Business
1 answer:
My name is Ann [436]3 years ago
8 0

Answer:

Option C is correct.

<u>The required rate of return for Mercury Inc., assuming that investors expect a 5% rate of inflation in the future is 18%.</u>

Explanation:

Real risk free rate = 3%

Inflation Premium = 5%

Nominal risk free rate Rf = Real risk free rate + Inflation Premium = 3% + 5% = 8%

Market risk premium (Rm –Rf) = 5%

Beta = 2

As per CAPM, required rate of return = Rf + beta * (Rm – Rf) = 8% + 2 * 5% = 18%

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An investor sells short 200 shares of ABC stock at $5.25 a share. He sells two put contracts (100 shares each) with a striking p
lakkis [162]

Answer:

The solution of the given query is provided below in the explanation segment.

Explanation:

(a)

The diagram according to the given query is attached below.

(b)

Given:

Investor sells,

= 200 shares

at,

= $5.25

Strike price,

= $5

Premium,

= $0.50

If the price is less than $5 is $.75 per share,

The investor's gain will be:

= 200\times 0.75

= 150 ($)

(c)

The investor would earn under $5.25 upon expiry, as longer as the spot price becomes less.

3 0
2 years ago
In 2016 Whitney's Cafe had a total revenue of $136,900. In 2017 Whitney's Cafe had a total revenue of $175,200. Complete the fol
Alexeev081 [22]

Answer:

1.28 times

Explanation:

How many times as large the revenue generated in 2017 is compared to that of 2016 can be derived from the division of the revenues for both years.

Given that the total revenue for 2017 is $175,200 and that for 2016 is $136,900

The number of times 2017 revenue is as large as that of 2016

= $175,200/$136,900

= 1.28 times

4 0
3 years ago
Customer satisfaction surveys will be effective when the questions included in the survey can provide actionable results.
Flauer [41]

Answer:

TRUE

Explanation:

Customer satisfaction surveys are instruments used by companies to measure the level of satisfaction the customers or consumers get from using their products. It is important because it gives the company information about the positive and negative perceptions about their products and services of which they could improve on. So if the information provided in the survey cannot provide actionable result, the whole survey becomes useless because the information provided cannot be acted upon.

4 0
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A homeowner sued a plumber for damages resulting from the plumber's allegedly faulty installation of water pipes in her basement
Leona [35]

Answer: The correct answer is YES it is admissible as evidence of the plumber's fault.

Explanation: An Evidence has probative value if it tends to prove an issue. The testimony of the homeowner of the regarding the plumber's response is a party admission. It is admissible as a hearsay exemption under Rule 801(d)(2)(A) which explains that a statement or statemens made by a party in a case cannot be excluded as hearsay when offered against him by the opponent. As such, the statement is a probative evidence.

4 0
3 years ago
Walmart reduced waste in packaging by 3,500 tons by __________.
mash [69]
Walmart noticed that the packaging in some of their products only led to waste. Based from this observation, Walmart established a new policy requiring its toy suppliers to reduce the packaging of their products by one square-inch. Just from this reduction alone, Walmart's waste from packaging alone decreased by 3,500 tons. 
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3 years ago
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