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
The following account balances relate to the stockholders' equity accounts of Kerbs Corp. at year-end.
umka2103 [35]

Answer:

a)  The amount of net income reported by Kerbs Corp. in 2020 is $299,800

b) Dividend = $17,000 ( Cash outflow from financial activities)

Common stock = $8,000 ( Cash inflow from financial activities)

Explanation:

                                                    2020                      2019

Common stock,                         10,500 shares     10,000 shares

                                                   $157,100                   $137,800

Preferred stock, 5,000 shares  $92,400                    $92,400

Retained earnings                      $299,800               $248,500

a) Total amount of net income reported by Kerbs Corp. in 2020

= Retained earnings by the beginning of the year + Net income - cash dividend - stock dividend

Calculation of net income = Closing retained earnings + dividends - openind retained earnings

= $299,800 + ($11,300 + $17000) - $248,500

= $79,600

= $248,500 + $79,600 - $11,300 - $17,000

= $299,800

b) Determine the amounts of any cash inflows or outflows related to the common stock and dividend accounts in 2020

Inflow to common stocks = opening common stock - closing common stock - stock dividend

= $157,100 - $137,800 - $11,300

= $8,000

Dividend = $17,000 ( Cash outflow due to dividend)

7 0
3 years ago
On July 1, the inventory of at Barnett Shoes was $60,000. Because of anticipated back-to-school sales, the owner wants to have a
AVprozaik [17]

Answer:

required purchase             83,500

Explanation:

The cost of inventory in july sales and our desired ending invenory is the amount we need. the beginning inventory is a portion of this demand already fullfil, we need to purchase for the difference.

cost of inventory sales for July:

           70,000 x (1 - 45%) =  38,500

desired ending inventory   105,000

beginning inventory        <u>    (60,000)   </u>

  required purchase             83,500

4 0
4 years ago
Jake wants to purchase a new computer and go to the Caribbean for spring break. The computer is priced at $1,299, and the vacati
In-s [12.5K]

Answer:

1. Jake can easily determine that the price of the computer is more than the price of the vacation.  ⇒ UNIT OF ACCOUNT

2. Jake has $1,574 in his checking account.  ⇒ STORE OF VALUE

3. Jake writes a check for $1,299. ⇒ MEDIUM OF EXCHANGE

Explanation:

The four functions of money are:

  1. unit of account: since money is a common denominator, it helps to assign value to different goods and services.
  2. store of value: you can save money in order to purchase gods and services in the future.
  3. medium of exchange: you can purchase and sell goods and services using. money
  4. standard of deferred payment: money allows loans that require future payments of both principal and interest.

5 0
3 years ago
An investment banker who earns more than $1 million a year, a food service worker who makes minimum wage, and a teacher with a s
Ivenika [448]

An investment banker who earns more than $1 million a year, a food service worker who makes minimum wage, and a teacher with a salary of $50,000 per year represent the presence of social <u>inequality </u>within society.

<h3>What is inequality?</h3>

Inequality can be defined as the way in which  income or wealth are not distributed equally  in a society as some people earn more than others.

Hence, their is the presence of social inequality within a society if a  investment banker earn $1 million a year, a food service worker makes minimum wage, and a teacher earn $50,000 per year.

Learn more about inequality here:brainly.com/question/24143597

#SPJ1

5 0
2 years ago
You are currently earning 12% (APR) compounded semiannually. Your investment company is switching all accounts to daily compound
Sav [38]

Answer:

The rate that will give the same effective annual rate of return is 0.033%.

Explanation:

a) Data and Calculations:

APR = 12%

Semi-annual compound rate = 6% (12/2)

Assumed calendar days in a year = 360 days

Effective daily rate of return = 12%/360 = 0.033%

b) The conversion of semi-annual compounding to daily compounding results in reduced rate of return.  In this case, we assume that there are 360 days in a year.  Since the APR = 12%, it means that the daily rate of return will be 12%/360, which is 0.033%.

6 0
3 years ago
Other questions:
  • Questions in Web surveys often use drop-down boxes as a manner of displaying the response choices for a question. This type of d
    13·1 answer
  • A Subaru representative has a solid relationship with Phil, a satisfied customer. Phil loves Subaru and will not accept anything
    9·1 answer
  • If the expected path of interest rates on one-year bonds over the next five years is 2%, 4%, 3%, 2%, and 1%, the expectations th
    5·1 answer
  • The profit margin on an item the company sells can best be defined as:
    9·2 answers
  • which strategy specifies the firm's overall direction in terms of its general orientaion toward growth, the industries or market
    9·1 answer
  • The cost for system 1 of dispensing maps is:
    15·1 answer
  • People who are part of the project team need to understand project management because they Multiple Choice Need to understand th
    7·1 answer
  • Goods in transit are included in a purchaser's inventory: Multiple Choice At any time during transit. When the goods are shipped
    11·1 answer
  • In the united states, loans from ________ are far ________ important for corporate finance than are securities markets.
    7·1 answer
  • In which step of the nursing process does the nurse determine the outcome of medication administration? group of answer choices
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!