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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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Foreign managers trained in the latest management techniques can often help to improve the efficiency of operations in the host
dezoksy [38]

Answer: Resource Transfer Effects.

Explanation:

These foreign managers are trained with well equipped management techniques whether those techniques are acquired or greenfield developments. These foreign managers bring with them these resources and transfer them within the host country. This Foreign direct investments falls into the category of Resource Transfer Effects.

4 0
3 years ago
If the money multiplier is 3 and the fed wants to increase the money supply by $900,000, it could:.
Tanya [424]

Answer:

buy $300,000 worth of bonds

Explanation:

Hope this helps:)...if not then sorry for wasting your time and may God bless you:)

3 0
2 years ago
Caribou Gold Mining Corporation is expected to pay a dividend of $6 in the upcoming year. Dividends are expected to decline at t
Oxana [17]

Answer:

A) $50

Explanation:

The computation of the intrinsic value of the stock is shown below:

But before that the required rate of return is computed by using CAPM

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

= 5% + 0.5 × (13% - 5%)

= 5% + 0.5 × 8%

= 5% + 4%

= 9%

Now the intrisinc value is

= Dividend ÷ (required rate of return - growth rate)

= $6 ÷ (9% - (-3%)

= $6 ÷ 12%

= $50

Hence, the intrinsic value of the stock is $50

Therefore the correct option is A.

4 0
3 years ago
FedEx Corp stock ended the previous year at $103.39 per share. It paid a $0.35 per share dividend last year. It ended last year
mr Goodwill [35]

Answer:

$730 and 3.53%

Explanation:

Given that

Initial Price = $103.39

Ending Price = $106.69

Dividend Paid = $0.35

Number of Shares owned = 200

The computation of the dollar return and the percent return is shown below:

Dollar return is

= [0.35 + ($106.69 - $103.39)] × 200

= $730

And, the percentage return is

= $730 ÷ (200 × $103.39)

= 3.53%

6 0
3 years ago
Income which accrue or arise outside india and also received outside india is taxable in case of.
Nadya [2.5K]

If income is accrued <u>or arises outside India and is not received in India</u>, it is not taxable in the case of Non-Resident.

<h3>Who is a resident and non resident?</h3>

A resident is a person who has resided in India in that year for 182 days or more. He is a natural person or an individual who is domiciled in a particular state.

A Non- Resident is a person who is not the resident of India for tax purposes. Section 2(30) defines non-resident as a person who is not a resident.

Basically, Income which accrue or arise outside india and also received outside india is taxable in case of Non-Resident.

Learn more about resident and non- resident here:-

brainly.com/question/14317583

#SPJ4

8 0
2 years ago
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