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Nastasia [14]
3 years ago
6

You are holding a stock that has a beta of 1.39 and is currently in equilibrium. The required return on the stock is 20.47%, and

the expected return on the market portfolio is 16.50%. What would be the expected return on the stock if the expected market return increased to 21.00% while the risk-free rate and beta remained unchanged
Business
1 answer:
r-ruslan [8.4K]3 years ago
7 0

Answer: 26.73%

Explanation:

You can calculate the expected return using the Capital Asset Pricing Model (CAPM).

Formula is:

Expected return = Risk free rate + beta * (Market return - risk free rate)

Use the previous figures to solve for the risk free rate:

20.47% = Rf + 1.39 * (16.50% - Rf)

20.47% = Rf + 22.935% - 1.39R

20.47% - 22.935% = Rf - 1.39Rf

-2.465% = -0.39Rf

Rf = -2.465% / -0.39

= 6.32%

New expected return is:

= 6.32% + 1.39 * (21% - 6.32%)

= 26.73%

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Answer:

Through allowing themselves to buy resources and spend them accordingly.

Explanation:

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Thus the above is the correct approach.

6 0
3 years ago
Colleen Mooney earned a salary of $400 for the last week of September. She will be paid on October 1. The adjusting entry for Co
gayaneshka [121]

Answer:

b. Salaries and Wages Expense 400 Salaries and Wages Payable 400

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The expense shall be recognized in the accounts of Colleen's employer at September 30, in respect of the salary earned by Colleen Mooney for the last week of September.

The following adjusting entry shall be recorded in Colleen's employer accounts:

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Based on above journal entry, the answer shall be b. Salaries and Wages Expense 400 Salaries and Wages Payable 400

3 0
3 years ago
Wilma needed to fill a position that had been open for several weeks. she knew what her perfect candidate would be like but so f
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7 0
3 years ago
Suzanne, Kyle, and Monique have been arguing for days over how they are going to divide up the responsibilities for their group
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Emergence.

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At this stage it is common for the individual interests and needs of the team members to be set aside in favor of the team's interests.

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6 0
3 years ago
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Answer:

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