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Alinara [238K]
3 years ago
13

A stock has a beta of 1.45, the expected return on the market is 19 percent, and the risk-free rate is 5.00 percent. What must t

he expected return on this stock be? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Business
1 answer:
devlian [24]3 years ago
4 0

Answer: 25.30%

Explanation:

This can be calculated by the Capital Asset Pricing Model (CAPM):

= Risk free rate + Beta * (Market return - Risk free rate)

= 5% + 1.45 * (19% - 5%)

= 5% + 20.3

= 25.30%

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a stock is expected to pay the dividend of $1 per share in two months and in five months. the stock price is $50, and the risk-f
Dimas [21]

The forward contract's initial value is 50.01 and its forward price is 1.9540.

<h3>Forward Contract: What is it?</h3>

A forward contract is a sort of derivative in which the underlying asset is sold at a defined price and at a later time. The contract includes the writer and the buyer as the two parties. Interest, currency exchange rates, metal, stocks, etc. are examples of the underlying asset in a derivative contract.

Given:

Dividend = $1 per share

Stock price = $50

Risk-free rate = 8% per annum

Present value of income from security= ( dividend X e^{-risk- free interest  rate X \frac{2}{12} }) + (dividend X e^{-risk- free rate X \frac{5}{12} } )

= ( 1 X e^{-0.08  X \frac{2}{12} } ) + (1 X e^{- 0.08 X \frac{5}{12} } )

= (1 X 0.98676) + (1 x 0.96722)

= 0.98676 + 0.96722

= 1.9540

Forward Price = (stock price - present value of income from security) X e^{- risk - free  rate X \frac{6}{12} }

= ( 50- 1.9540) X e^{-0.08 X \frac{6}{12} }

= 48.046 X 1.041

= 50.01

Learn more about forward contract: brainly.com/question/15581105

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6 0
1 year ago
The Securities and Exchange Commission (SEC) sought to change the rules so that stock options would in the future be charged as
aivan3 [116]

Answer:

Congress may threaten to defund the SEC and may also dissolve the agency.

Explanation:

The congress has the power to interfere in the rules adopted by an agency if there is a possibility that these rules could harm the market at local or national level. This interference has even greater power if the agency receives funding and is actively dependent on the state's permission to remain established, as is the case with the SEC.

In the question above, we can see that the SEC has adopted rules that displease Congress, so that Congress can persuade the SEC to adopt these rules, it may threaten to defund the SEC and may also dissolve the agency.

7 0
3 years ago
emilio and dylan are studying the strengths and weaknesses of their construction business, construction concepts, as well as res
Shalnov [3]

Emilio and Dylan are conducting a SWOT Analysis of their construction business.

A SWOT analysis enables a company to find out:

  • Strengths - the parts of its company that set it apart and give it an advantage
  • Weaknesses - areas that they can and should improve on to be more successful
  • Opportunities -  whatever developments in their industry that they can leverage on to become more successful
  • Threats - things that they need to watch out for that could give them problems in the near future

This is what Emilio and Dylan are doing and it is very important as it can allow a company to see the things it needs to do to be successful.

In conclusion, Emilio and Dylan are conducting a SWOT analysis to ensure that their business grows.

<em>Find out more at brainly.com/question/18068310. </em>

7 0
3 years ago
Leroy was recently elected to the position of chair of his department at the university. with regard to department business, ler
Free_Kalibri [48]

If Leroy was recently elected to the position of chair of the department at the university with regard to department business, Leroy now has legitimate type of power. It <span>originates from a formal locus or office held in the organization's chain of command of authority.</span>

7 0
4 years ago
Heather is sixteen but looks much older. She goes into a jewelry store and buys a diamond bracelet with the money she has been s
patriot [66]

Answer:

can return the bracelet and get her money back

Explanation:

Minors have a restriction on the products that they can. To purchase these products they must have consent of their parent or guardian.

An identity card is required to determine the age of the buyer to avoid wrong sales to minors.

Items prohibited from sale to minors include: alcohol, tobacco, petrol, offensive weapons, intoxicating substances, and expensive jewelry.

So in this scenario since due diligence was not carried out by the store to check Heather's age on purchase, she can return the diamond bracelet and get back her money.

This was an illegal sale.

3 0
4 years ago
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