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brilliants [131]
3 years ago
10

Company A has a beta of 0.70, while Company B's beta is 0.80. The required return on the stock market is 11.00%, and the risk-fr

ee rate is 4.25%. What is the difference between A's and B's required rates of return? (Hint: First find the market risk premium, then find the required returns on the stocks.)
Business
1 answer:
alina1380 [7]3 years ago
5 0

Answer:

the differene in the required rate of return of eahc company is 0.675%

Explanation:

we solve using the CAPM method:

Ke= r_f + \beta (r_m-r_f)  

risk free 0.0425

market rate 0.11

Company A

beta(non diversifiable risk) 0.7  

Ke= 0.0425 + 0.7 (0.0675)  

Ke 0.08975 = 8.975%

Company B

beta(non diversifiable risk) 0.8

Ke= 0.0425 + 0.8 (0.0675)

Ke 0.09650 = 9.65%

difference: 9.65% - 8.975% =  0.675%

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At what point does corporation make money from stocks
labwork [276]

Answer:

a corporation make money from stocks  at the IPO. Initial Public Offering.

Explanation:

A corporation only makes money out of a stick when it is Issued for the first time. This operation is called IPO and it’s the primary market for a stock in the exchange market.  

After the stock is sold to an investor the stock goes into the secondary market, In the secondary market the people that make a profit out of the sale of a stock are the stockholders but not the corporation.  

3 0
3 years ago
The FDA banning a specific product that a company sells is an example of:_________
mario62 [17]

Answer: unsystematic risk that can be diversified away

Explanation:

The FDA banning a specific product that a company sells is an example of unsystematic risk that can be diversified away.

The above scenario is simply a company related risk and therefore an unsystematic risk but it can actually be diversified away by proper utilization and allocation of resources. Therefore, the correct option is E

6 0
3 years ago
An airport shuttle company forecasts the number of hours its drivers will work based on the distance to be driven (in miles) and
siniylev [52]

Answer:

5.5 Hours

Explanation:

The main difference among both the drivers is the number of jobs and the difference of working hours can only be determined by adding number of jobs.  Sofia has two more jobs compared to victor. Following is the method to calculate the working hours:

4+0.75(2)=5.5 hours

Sofia is expected to work for 5.5 hours

3 0
3 years ago
Which part of a food label is the primary tool for determining the healthfulness of the product?
Klio2033 [76]

Answer: (B) Nutrition fact panel

Explanation:

The nutrition fact panel is one of the primary tool which is used for determining the nutrition and also the healthfulness of the given material and the products.

The nutrition fact panel is the part of the food label and it providing the information about the content of nutrient in the food and the various types of beverages.

It basically provide the information about the sodium, fat content and the sugar.

Therefore, Option (B) is correct.

6 0
4 years ago
The hospitality industry does not have a definition upon which everyone can agree.
grin007 [14]

Answer:

false

Explanation:

?

6 0
4 years ago
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