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
Damm [24]
3 years ago
14

We Do Bankruptcies is a law firm that specializes in providing advice to firms in financial distress. It prospers in recessions

when other firms are struggling. Consequently, its beta is negative, −0.2. a. If the interest rate on Treasury bills is 6% and the expected return on the market portfolio is 16%, what is the expected return on the shares of the law firm according to the CAPM?
Business
1 answer:
joja [24]3 years ago
8 0

Answer:

4%

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)

= 6% - 0.2 × (16% - 6%)

= 6% - 0.2 × 10%

= 6% - 2%

= 4%

The (Market rate of return - Risk-free rate of return)  is also known as market risk premium

You might be interested in
A ________ is a person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the co
Darya [45]

Answer:

profitable customer

Explanation:

A profitable customer of a business enterprise is any economic agent which include individuals, firms and government for which the revenue generated from servicing or supplying them goods and services exceeds the entire cost incurred in providing such service or goods.

A successful business is one that is able to maintain a data base and record of all the customers and identify the profitable ones so as to concentrate on them to achieve maximum profit.

6 0
4 years ago
Authors<br> d. p. rosenbaum and g. ganson concluded that the<br> d.a.r.e. program _________.
Pani-rosa [81]

Drug Abuse Resistance Education (D.A.R.E.) is a police officer-led  arrangement of classroom exercises that shows kids (normally in rudimentary or center school) how to remain tranquilize free and oppose peer weight.  

According to Rosenbaum and Hanson (1998), D.A.R.E has no critical in general effect on utilizing cigarettes or liquor  

They concluded that, Given the tremendous uses in time and cash required with D.A.R.E., no doubt proceeded with endeavors should center around different systems and projects that may deliver more significant impacts.

5 0
3 years ago
Chandler Tire Co. is trying to decide which one of two projects it should accept. Both projects have the same start-up costs. Pr
mojhsa [17]

Answer:

The second project should be chosen. Because the present value of the second project is greater than that of the first project.

Explanation:

The project that should be chosen can be determined by comparing the present value of both projects.

Present value is the cash flows from a project discounted at the discount rate.

Present value can be found using a financial calculator;

For project 1,

Cash flow each year from year one to six is  $52,000

Discount rate = 15%

Present value =$196,793.10

For project 2,

Cash flow each year from year one to eight is  $48,000

Discount rate = 15%

Present value =$215,391.43

The second project would be chosen because its present value is greater than that of the first project.

I hope my answer helps you

6 0
3 years ago
A football game between the Thunder and the Sharks is in its closing minutes, with the Thunder ahead by 20 points. The Thunder’s
PolarNik [594]

Answer: increased, trade- offs, marginal thinking, small.

Explanation:

According to the passage, The coach is weighing a slightly<u> increased </u>risk of losing against a slightly decreased risk of injury to the star quarterback. This weighing o<u>f trade-offs </u>is an example of <u>marginal thinking,</u> because the star quarterback was in for most of the game, and the coach's decision concerns <u>small </u>shifts in probabilities with the game nearly over.

6 0
3 years ago
A portfolio is invested 22 percent in Stock G, 50 percent in Stock J, and 28 percent in Stock K. The expected returns on these s
Fittoniya [83]

Answer:

The expected return of the portfolio is 12.8%

Explanation:

A portfolio is invested 22% on stock G, 50% on stock J and 28% on stock K.

The expected return on stock G is 7%, on stock J is 13% and on stock K is 17%.

Weighted return on stock G

= 0.22*7%

=1.54%

Weighted return on stock J

=0.50*13%

=6.5%

Weighted return on stock K

=0.28*17%

=4.76%

The expected return on the portfolio

=Weighted return on stock G+Weighted return on stock J+Weighted return on stock K

=(1.54+6.5+4.76)%

=12.8%

8 0
3 years ago
Other questions:
  • Inventory Analysis The following data were extracted from the income statement of Keever Inc.: Current Year Previous Year Sales
    10·1 answer
  • Cassie’s app is considered to be_____.
    5·2 answers
  • Select all that apply.
    10·2 answers
  • Susan was conducting a group discussion in her organization. She found that the sales people and the production team had differe
    9·1 answer
  • Flint Corporation issued 700 shares of no-par common stock for $7,800. Prepare Flint’s journal entry if (a) the stock has no sta
    15·2 answers
  • March 1 Issues 49,000 additional shares of $1 par value common stock for $46 per share. May 10 Purchases 4,400 shares of treasur
    15·1 answer
  • Failure to prepare an adjusting entry at the end of a period to record an accrued revenue would cause Group of answer choices ne
    6·1 answer
  • Assume the firm’s dividend payment is $0.18, and that the required rate of return for the firm’s industry is 10.1%. What is the
    7·1 answer
  • Beck Manufacturing reports the following information in T-accounts for the current year. Raw Materials Inventory Debit Credit Be
    8·1 answer
  • Before the meeting ended, Sofia shared her new product idea; consequently, her ideas were included in the meeting minutes.
    11·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!