A :)
Im 99% sure it’s right, really hope it is!
Answer:
0.75, 0.25
Explanation:
With an increase in disposable income marginal propensity to consume increase. Similarly, with an increase in disposable income marginal propensity to save increases. Marginal propensity to save is the amount of money saved or kept after a fraction increase in overall disposable income.
MPC = 300/400=0.75
MPS = 100/400=0.25
Marginal propensity to consume is 0.75
Marginal propensity to save is 0.25
Answer:
D. The threat of takeovers tends to reduce potential conflicts between stockholders and managers.
Explanation:
As with the threat of takeover, there comes the risk of losing control, power, monetary benefits, the stockholder's tend to agree with managers, and the manager's tend to agree with stockholders.
As both aims for no takeover of the company, both work in for each other, agreeing to the suggestions placed.
There is no dis-regard to any of the suggestions paid by any of the party. This threat actually creates moral harmony and unity among stakeholders and management.
Therefore, correct answer is:
D. The threat of takeovers tends to reduce potential conflicts between stockholders and managers.
Answer:
The risk free rate is 3.325%
Explanation:
The required rate of return or cost of equity of a stock can be calculated using the CAPM. The CAPM estimates the required rate of return of a stock based on three factors- risk free rate, stock's beta and the market risk premium. The equation of required rate of return under CAPM is,
r = rRF + Beta * (rM - rRF)
Where,
- rRF is the risk free rate
- rM is the return on market
- (rM - rRF) gives us the risk premium of market
We already have the values for r, Beta and rM. Plugging in these values in the formula, we calculate the rRF to be,
Let rRF be x.
0.1185 = x + 1.24 * (0.102 - x)
0.1185 = x + 0.12648 - 1.24x
1.24x - x = 0.12648 - 0.1185
0.24x = 0.00798
x = 0.00798/0.24
x = 0.03325 or 3.325%