When a bond's rating is upgraded, the bond is considered a safer investment. This will lower the yield on the bond, because the risk premium is lower. The same principle is at work if you apply for loan. You can think of your credit score as your "bond rating". The better your credit score, the more of a safe bet you are to lend money to, and the more likely you are get a lower interest rate. The same is true of bonds. The yield of a bond is inversely related to the perceived risk of the bond not being repaid.
Compare amounts from a recent year to a base year and identify growth trends.
Explanation:
Horizontal analysis (also defined as pattern analysis) is a method for the study of financial reporting that indicates improvements in the sums of the respective financial statements over a span of time. This is a valuable method for determining patterns. Statements over two or more cycles shall be required over lateral study.
In a horizontal analysis, you equate transactions with one another over time periods — in eg, accounts receivable (A / R) in 2014 and A / R in 2015.
To conduct a vertical report, pick an investment account (comparable to gross revenue) and add all balance sheet funds as a ratio.
Answer:
2.2
Explanation:
In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below
Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)
18% = 7% + Beta × 5%
18% - 7% = Beta × 5%
11% = Beta × 5%
So, the beta would be
= 2.2
The (Market rate of return - Risk-free rate of return) is also known as market risk premium and the same has applied.
