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matrenka [14]
3 years ago
13

Which one of the following stocks is correctly priced according to CAPM if the risk-free rate of return is 3.4 percent and the m

arket risk premium is 7.4 percent? Stock Beta Expected Return A .87 .096 B 1.09 .102 C 1.62 .146 D .98 .107 E 1.16 .139
Business
1 answer:
MrRissso [65]3 years ago
6 0

Answer:

D) Beta .98 expected return .107

Explanation:

In CAPM (Capital Asset Pricing Model), expected return = risk-free rate + Beta * market risk premium = 3.4% + Beta * 7.4%

We try every choice consecutively

A) Beta .87  expected return .096

⇒ expected return = 3.4% + 0.87 * 7.4% = 0.098

A is wrong

B) Beta 1.09   expected return .102

⇒ expected return = 3.4% + 1.09 * 7.4% = 0.1147

B is wrong

C) Beta 1.62 expected return .146

⇒ expected return = 3.4% + 1.62 * 7.4% = 0.154

C is wrong

D) Beta .98 expected return .107

⇒  expected return = 3.4% + 0.98 * 7.4% = 0.107

D is TRUE

E) Beta 1.16   expected return .139

⇒ expected return = 3.4% + 1.16* 7.4% = 0.12

E is wrong

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Answer:

Option D, T Bonds and Eurodollars , is the right answer.

Explanation:

Option D is correct because the future contract or interest rate future is the instruments that pay or offer the interest. However, the contract is an agreement on which buyer and seller are agreed for the future delivery of any interest that the asset bears. However, this contract gives the offer to the buyer and seller to lock the price of the asset that bears the interest in a future date. Moreover, this instrument is not a market traded instrument, these are the instrument used for a cash settlement. Thus, the same can be seen with option D. thus it is correct.

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4 years ago
One of the attributes of a successful person is continual learning. Discuss what lifelong learning means. Is college education t
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Answer:

Answer to the first part is, Life long learning means actively engaging in learning and understanding from new experiences and scenarios. It is an Ongoing, Voluntary and Self-motivated process.

Answer to the second part is No. Not all successful people have college degrees.

Answer to the third part is discussed below.

Answer to the fourth part is discussed below.

Explanation:

3rd part:

Pros:

  • You can get the access to all the required resources
  • You can learn from the academics who have mastered their subjects
  • There is a precise and clear syllabus and a framework in all the subjects you learn

Cons:

  • The knowledge is mostly theoretical and may have significant discrepancies with the practical real-world scenarios
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  • Remember that old saying "Experience is better than Education?"
  • It can be really expensive

<u>Alternatives to Going to college</u>

  1. Start a small business
  2. apprenticeships or fellowships
  3. Volunteer in various social and private endeavors and projects
  4. Join the military perhaps?

4th Question

It is a good idea to go to college if you have satisfied all the qualifications to enter college and if you have enough money. However, if you can't, then that is completely ok too!

Life is not about spending 4 years studying a specific subjects in a college. Most often, the most successful and the wealthiest people have never set a foot on a university! Learning from Experience, commitment, self motivation and good attitudes are all you need if you truly want to be successful and happy in life!

and the other part, Is college education the only way to continue to learn?

Of course NOT!! back at the early days this statement was true as most of the universal knowledge was centralized within universities and academics. But this is the 21st century and the dawn of the digital era has connected everyone and everything.Knowledge has now become accessible to anyone with a computer and an internet connection! It is no longer centralized inside colleges! All you require is a bit of self-discipline, curiosity and motivation!

4 0
3 years ago
Raymond is required to learn long lists of numbers for his job. Because he wants to remember as many numbers as possible, he bre
Sergeu [11.5K]
D. Chunking

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4 years ago
What would you do if you can stop time
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Answer:

Tbh if I could stop the time

I would do anything to get the time back to normal since it will probably  be boring doing it yourself with no help if you know what I mean :)

Explanation:

Hoped this helped :)

5 0
3 years ago
Read 2 more answers
Which of the following would be considered a capital expenditure?
Alborosie

Answer:

B. Paying city inspection fees for new equipment

Explanation:

Capital expenditure is an expense incurred by the business to maintain its fixed assets with an objective to increase its efficiency. Any additions and improvements in fixed assets is an capital expenditure.

City inspection is required to evaluate the working condition of the asset and any fees paid for it, is a capital expenditure.

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