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
grin007 [14]
3 years ago
15

Assume the expected return on the market is 9 percent and the risk-free rate is 4 percent. (a1) What is the expected return for

a stock with a beta equal to 1.80?
Business
1 answer:
Ad libitum [116K]3 years ago
8 0

Answer:

r or expected rate of return = 0.13 or 13%

Explanation:

Using the CAPM, we can calculate the required/expected rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.

The formula for required rate of return under CAPM is,

r = rRF + Beta * (rM - rRF)

Where,

  • rRF is the risk free rate
  • rM is the market return

r = 0.04 + 1.80 * (0.09 - 0.04)

r or expected rate of return = 0.13 or 13%

You might be interested in
Marigold Manufacturers Inc. is a firm that produces and sells home appliances. Marigold Manufacturers Inc. acquires a women's ap
Ronch [10]

Answer:

unrelated diversification

Explanation:

According to my research on different business strategies, I can say that based on the information provided within the question this is an example of unrelated diversification. This is a type of diversification in which a business adds completely new and unrelated product lines to their business and enter new markets. Which is what Marigold Manufacturers Inc is doing since they sell home appliances and decided to enter into the market of women's fashion apparel.

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

3 0
3 years ago
Short-term bank loans (Select all that apply.) usually have a lower interest rate than long-term debt. usually have a higher int
iVinArrow [24]

Answer:

A. usually have a lower interest rate than long-term debt.

D. are frequently used by large corporations as a significant component of capital structure.

Explanation:

A short-term bank loan can be defined as a type of loan that provides quick cash which mainly have a shorter repayment period when compared to a traditional loan.

Basically, when a small business owner (entrepreneur) or start-up needs to finance a temporal personal or working capital requirements but isn't eligible to apply for a line of credit from a bank; he or she can obtain a short-term bank loan.

Short-term bank loans usually have a lower interest rate than long-term debt and are frequently used by large corporations as a significant component of capital structure.

6 0
3 years ago
In January, Tongo, Inc., a branding consultant, had the following transactions a. Received $16,600 cash for consulting services
belka [17]

Answer:

Tongo, Inc.

General Journal:

a. Debit Cash Account $16,600

Credit Services Revenue $16,600

To record the receipt of cash for consulting services.

b. Debit Cash Account $15,000

Credit Common Stock $15,000

To record the issue of common stock for cash.

c. Debit Equipment $16,100

Credit Cash Account $4,025

Credit Notes Payable $12,075

To record the purchase of equipment for cash and notes payable.

d. Debit Cash Account $12,500

Credit Deferred Revenue $12,500

To record the receipt of cash for consulting services.

e. Debit Supplies $1,550

Credit Accounts Payable $1,550

To record supplies bought on account.

f. Debit Utilities Expense $1,960

Credit Utilities Payable $1,960

To record utilities expense for the month.

g. Debit Accounts Receivable $19,600

Credit Service Revenue $19,600

To record consulting services on account.

h. Debit Cash Account $14,300

Credit Accounts Receivable $14,300

To record the receipt of cash from customers on account.

i. Debit Accounts Payable $775

Credit Cash Account $775

To record payment for supplies.

Explanation:

Tongo, Inc. prepares the general journal to record business transactions as they occur on a daily basis initially in the books of accounts.  The general journal shows the accounts that are debited and the ones that are credited after identifying the accounts involved for each transaction.

5 0
3 years ago
Suppose that disposable income, consumption, and saving in some country are $200 billion, $150 billion, and $50 billion, respect
Vaselesa [24]

Answer:

eydhhdhdmdhdhejeidhhdhsgwnwhwgsshsguwbsfdydnegyrhdhr

3 0
2 years ago
Siebel Incorporated, a non-publicly traded company, has 2009 after-tax earnings of $25 million, which are expected to grow at 6
Readme [11.4K]

Answer:

Answer of each requirement is given seperatly below.

a What is the value of Siebel using the DCF method?

Value under DCF = CF * (1+growth rate)/ (WAAC" -Growth rate)

Putting values (assuming after tax earning is all in cash)

Value of SI = 25 (1+6%)/ 20%-6% = 189 million dollars

 

"WAAC calculation

Here WAAC is equal to cost of equity (ke) as company is debt free.

so

Ke = risk free rate + beta (risk premium)

    = 5 + 2.5 (6) = 20%

b What is the value using the comparable recent transactions method?

Based on recent tansaction the value of siebel incorporated will be               calculated as shown below

 Value of SI = Profit afte * 10 = 25 * 10 = 250 million dollars

Publicly-traded Rand Technology, a direct competitor of Siebel's sale is taken as bench mark.

c What would be the value of the firm if we combine the results of both methods?

By combining value of both value technique we get 189 + 250 = 439 million dollars.

8 0
3 years ago
Other questions:
  • Yvette Bradbury is an account representative at Commerce Savings Bank, earning $45,600 annually, paid semimonthly. She contribut
    10·1 answer
  • When opening a checking account, the bank does not run an account verification if you provide a state-issued ID. true or false
    15·1 answer
  • On November 19, Nicholson Company receives a $24,600, 60-day, 10% note from a customer as payment on account. What adjusting ent
    6·1 answer
  • Jasper Company has sales on account and for cash. Specifically, 70% of its sales are on account and 30% are for cash. Credit sal
    9·1 answer
  • A building was purchased for $66,500. The asset has an expected useful life of eight years and depreciation expense each year is
    7·1 answer
  • After a recent spike in violent crime, the local police department wants to spend $550,000 on a new crime fighting initiative. I
    8·1 answer
  • One drawback of mailed marketing survey is
    5·1 answer
  • Consider the market for film streaming services, tv sets, and movie tickets.for each pair, identify whether they are complements
    10·1 answer
  • Compare the types of team with the characteristics of successful team and affective team
    11·1 answer
  • ABC Corporation is one of the largest energy companies in the United States, with over $50 million in publicly traded shares. Th
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!