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
Anvisha [2.4K]
3 years ago
11

A stock has an average expected return of 10.1 percent for the next year. The beta of the stock is 1.45. The T-Bill rate is 5.5%

and the T-Bond rate is 3.5 %. What is the market risk premium?
a. 3.17%.
b. 4.60%.
c. 14.60%.
d. 2.48%.
e. 4.93%.
Business
1 answer:
Aleksandr [31]3 years ago
3 0

Answer:

The right solution is "4.55%".

Explanation:

Given that,

Expected return,

= 10.1%

Risk-free rate,

= 3.5%

Beta,

= 1.45

Now,

The market risk premium will be:

⇒ Expected \ return=Risk-free \ rate+Beta\times (Market \ risk \ premium)

⇒ Market \ risk \ premium=\frac{Expected \ return-Risk -free \ rate}{Beta}

By putting the values, we get

⇒                                      =\frac{10.1-3.5}{1.45}

⇒                                      =\frac{6.6}{1.45}

⇒                                      =4.55 (%)

You might be interested in
A company's direction, objectives, and strategy Group of answer choices are set in stone as the end of the planning process. nev
STALIN [3.7K]

Answer:

are never final, as managing strategy is an on-going, dynamic process.

Explanation:

In Business management, a strategy can be defined as a set of guiding principles, actions and decisions that an organization combines so as to achieve its business goals, attract customers and possess a competitive advantage over its rivals in the industry.

Business strategy sets the overall direction for the business because it focuses on defining how a business would achieve its goals, objectives, and mission; as well as the funds and material resources required to implement or execute the business plan. The components of a business strategy includes the following;

I. Value.

II. Vision.

III. Mission.

Hence, a company's direction, objectives, and strategy are never final because managing strategy is a continuum or an on-going, dynamic process. Thus, it's never a now and then task.

6 0
3 years ago
​rajon is trying to decide between majoring in psychology and majoring in economics. he considers the intensity of each major si
jeyben [28]

Rajon has employed a utility theory of which a person has decided and targeted his or her preference in life as it is seen on Rajon’s actions as he tries to determine the course he would take of which is beneficial for him in the future which are considered to be his preference in his life. It is also a way of having people rank choices and which would be of preference or priorities in their life. It can be illustrated on Rajon’s actions as he tries to take up choices of which is best and which are his priorities in relation his field and job after he graduated in his school.

5 0
3 years ago
The common stock of Jensen Shipping has an expected return of 16.2 percent. The return on the market is 11.2 percent, the inflat
tankabanditka [31]

Answer: 1.66

Explanation:

Based on the information given in the question, the beta of the stock will be calculated as follows:

Expected return = 16.2%

Market return = 11.2%

Inflation rate = 3.1%

Risk-free rate of return = 3.6%

We should note that:

Expected return = risk-free rate + Beta × (market rate- risk-free rate)

Therefore,

16.2% = 3.6% + Beta × (11.2% - 3.6%)

16.2% = 3.6% + Beta × 7.6%

16.2% - 3.6% = Beta × 7.6%

12.6% = Beta × 7.6%

Beta = 12.6% / 7.6%

Beta = 1.66

4 0
3 years ago
G. How trustworthy do you think the secondary source is? Do you think this source
melomori [17]

Answer: The secondary source on a topic may be biased because the information is translated and the text and information could be altered

Explanation:

3 0
3 years ago
____ consumption occurs when consumers "set apart" objects and events from normal activities and treat them with respect. ____ c
solong [7]

Answer:

  • Sacred consumption
  • Profane consumption

Explanation:

This differentiation is based on special religious events (e.g. religious holidays) that considered some goods as sacred, while profane had to do with everyday life.

Some modern marketing strategies try to build sacred brands. For example, Google has become our God of all knowledge and no one even dares to challenge that almost religious belief. Anyone can make their own coffee or buy coffee at any coffee shop, but Starbucks is different, it has built a sense of emotional connection with the public. It's not any coffee that we need or want.  

6 0
4 years ago
Other questions:
  • One of the unique problems that banks face is: A. they hold illiquid assets to meet liquid liabilities. B. they hold liquid asse
    13·1 answer
  • Wright Company's cash account shows a $31,100 debit balance and its bank statement shows $29,400 on deposit at the close of busi
    15·1 answer
  • A for-profit institution that works with large companies and corporations to manage deposits, loans, and investments is known as
    7·1 answer
  • Which of the following is an explanation?
    15·1 answer
  • The _____ requires that executive agencies and subcontractors and contractors of the federal government receiving more than $2,5
    14·1 answer
  • The interest on some municipal bonds is tax free, in contrast to the interest on corporate bonds. If the current annual interest
    10·1 answer
  • During the initial Forming stage, where new team members are excited yet concerned that the project work might be difficult, the
    9·1 answer
  • The owner of a small fleet of taxicabs had his cabs serviced by a national chain of auto service centers. One of his cabs went t
    6·1 answer
  • Three soft skills i need an answer
    10·1 answer
  • The risk free rate currently have a return of 2.5% and the market risk premium is 5.77%. If a firm has a beta of 1.42, what is i
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!