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masha68 [24]
3 years ago
12

Suppose you forecast that the standard deviation of the market return will be 20% in the coming year. If the measure of risk ave

rsion in is A = 4: a. What would be a reasonable guess for the expected market risk premium? b. What value of A is consistent with a risk premium of 9%? (Round your answer to 2 decimal places.) c. What will happen to the risk premium if investors become more risk tolerant?
Business
1 answer:
enyata [817]3 years ago
7 0

Answer:

a) 16%

b) 2.25

c) Increase in expected market risk premium

Explanation:

Expected standard deviation of market return = 20%

measure of risk aversion ( A ) = 4

a) Determine a reasonable  expected market risk premium

= A * ( std ) ^2

= 4 * ( 20%)^2

=  16%

b) determine Value of A

market risk premium = A * ( std )^2

∴ A = 9% / ( 20% ) ^2

      = 0.09 / 0.04

      = 2.25

c) If investors become more risk tolerant the expected market risk premium will increase

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In the short run one factor of production, for instance capital is fixed. This is a time period of fewer than four-six months. In the short run, the firm should increase output as long as marginal revenue exceeds marginal cost, and reduce output if marginal revenue is less than marginal cost.

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2 years ago
Sustainable development refers to A. placing restraints on a company's growth until all ancillary support services are in place
Semmy [17]

Answer:

The correct answer is letter "C": conducting business in a way that protects the natural environment while making economic progress.

Explanation:

Sustainable development is the capacity an institution has to satisfy individuals' needs without damaging the environment neither harming the atmosphere. To reach this stage there must be an equilibrium between the <em>economy, society, </em>and <em>the environment.</em> Sustainable development is difficult to be obtained with high poverty rates, habitats destruction, or indiscriminately resources exploitation.

4 0
3 years ago
Both power distance and femininity are negatively related to the Environmental Sustainability Index.
cricket20 [7]

Both power distance and femininity are negatively related to the Environmental Sustainability Index. False

<h3>What is Environmental Sustainability?</h3>

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The power of the natural environment to renew itself and maintain its viability is really amazing when viewed in that light. For instance, when a tree falls, its decomposition enriches the earth with nutrients. These nutrients provide the right environment so that subsequent saplings can thrive.

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8 0
2 years ago
A company purchased a delivery van for $23,000 with a salvage value of $3,000 on September 1, Year 1. It has an estimated useful
kaheart [24]

Answer:

<em>It will recognize 1,333.33 Depreciaton expense</em>

<em>for December 31th, year 1</em>

Explanation:

The straight-line Method is simply and easy to understand, It distribute the depreciation equally between years. So that implies that the formula should be:

\frac{Adquisition \: Value- \: Salvage \: Value}{useful \: life}= Depreciation \: coplete \: year

(23,000 - 3,000) / 5 = 20,000 / 5 = 4,000

Now we have to calculate the proportion

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3 0
3 years ago
The five stages a buyer passes through in making choices about which products and services to buy is called the postpurchase beh
pychu [463]

Answer:

Purchase Decision Process

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The purchase decision process is the one through which the a buyer makes his decision of buying a certain product.

This consumer buying process has five step which they use to make their decision, are following;

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I hope the answer is helpful.

Thanks for asking.

8 0
3 years ago
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