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
WINSTONCH [101]
3 years ago
5

Consider the CAPM. The risk-free rate is 7%, and the expected return on the market is 13%. What is the expected return on a stoc

k with a beta of 1.5?
Business
1 answer:
Ber [7]3 years ago
5 0

Answer:

r = 0.16 or 16%

Explanation:

Using the CAPM, we can calculate the required 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 return on market

r = 0.07 + 1.5 * (0.13 - 0.07)

r = 0.16 or 16%

You might be interested in
Eduardo is currently involved in FBLA (Future Business Leaders of America). He has dreams to work on Wall Street. Assuming he wi
jarptica [38.1K]

Answer:

sag

Explanation:

not sure

6 0
3 years ago
A decrease in the inventory account during the year should be reported on the indirect method statement of cash flows as:
Elza [17]

Answer:

a.An increase in cash flows from operating activities

Explanation:

The cash flow statement categories the company's transactions in a financial period into 3 groups; these are operating, investing and financing.

The net profit/loss, depreciation, changes in current assets such as inventory, accounts receivables etc, (other than cash) and liabilities are considered as operating activities including income taxes.  

The sale of assets, interest received, purchase of investments are examples of investing activities while the issuance of stocks, debt principal deduction (loan settlement), issuance of debt securities etc are examples of financing activities.

An increase in assets other than cash is an outflow while an increase in liabilities is an inflow. A decrease in assets (other than cash) is an inflow of cash while a decrease in liabilities is an outflow of cash.

5 0
3 years ago
Read 2 more answers
1. Which of the following is not characteristic of a corporation?
Oxana [17]
<span>1. Which of the following is not characteristic of a corporation?

d. Corporations are required to file federal income tax returns.

2. Characteristics of a corporation include

d. Shareholders who have limited liability

3. One of the main disadvantages of the corporate form is the

b. Double taxation of dividends


4. Under the corporate form of business organization

a. Ownership rights are easily transferred.


5. Those most responsible for the major policy decisions of a corporation are the

b. Board of directors.


6. Stockholders' equity

d. Is shown on the income statement

7. The price at which a stock can be sold depends upon a number of factors. Which statement below is not one of those factors?

b. Investor expectations of the corporation's earning power


8. Which of the following accounts below is reported in the paid-in capital/stockholders' equity section of the corporate balance sheet?

b. Stock Dividends


9. The excess of issue price over par of common stock is termed a(n)

d. Premium


</span>
8 0
3 years ago
Read 2 more answers
Which of the following is an example of a hidden variable? Quality of life is a hidden variable because it cannot be measured di
My name is Ann [436]

Answer:

<u>Quality of life is a hidden variable because it cannot be measured directly but must be inferred from measurable variables such as wealth, success, and environment. </u>

Explanation:

<u>Hidden variable:</u> The term "hidden variable" is described as the proposition that specific "statistical models" of any physical systems, for example, Quantum mechanics are being incomplete inherently, and along with this the apparent randomness of a particular system is being dependent not on "collapsing functions" but instead it is due to any unmeasurable or unseen or hidden variables.

8 0
3 years ago
John (45) and Cynthia (46) are married, and they will file a joint return. During the year, they earned investment income consis
svetlana [45]

Answer:

                          Calculation of Net taxable income

Particulars                                                        Amount        Amount

Interest income from savings interest                                   $200

Interest income from certificate deposit                                $350

Dividend from saving account with                                        $100

local credit union  

Interest income from us treasury note                                    $250

Tax exempt interest from municipality bond                          $500

Ordinary dividend                                                                     <u>$1,700</u>

Gross total income                                                                    $3,100

<u>Income exempt</u>

Dividend from saving account                           $100

Dividend from treasury note                              $250

Tax exempt interest from municipality bond    <u>$500</u>              <u>$850</u>

Net taxable income                                                                   <u>$2,250</u>

8 0
3 years ago
Other questions:
  • Use your knowledge of the different concepts related to the communication process to classify the following statement or situati
    7·1 answer
  • Clayton, inc. purchased a van on january 1, 2016, for $850,000. estimated life of the van was five years, and its estimated resi
    9·1 answer
  • Which of the following would most likely be included as part of manufacturing overhead in the production of a wooden table?A) th
    8·1 answer
  • That portion of corporate profits which is included in personal income is: dividends corporate income taxes consumption of fixed
    11·1 answer
  • 1. Health maintenance organizations, or HMOs, differ from the indemnity insurance system by: A. Reimbursing either the provider
    5·1 answer
  • The global positioning system is a network of 21 ________ plus 3 working spares.
    14·1 answer
  • Perry Investments bought 2,000 shares of Able, Inc. common stock on January 1, 20X1, for $20,000 and 2,000 shares of Baker, Inc.
    9·1 answer
  • Sam and Sally Green have a standard homeowners policy with no endorsements. The dwelling is insured for its full value. Indicate
    14·1 answer
  • An industry consists of three firms with sales of $250,000, $825,000, and $315,000. a. Calculate the Herfindahl-Hirschman index
    6·1 answer
  • Why does Staples participate in Anti-Money Laundering Compliance?
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!