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madreJ [45]
3 years ago
14

Using the capital asset pricing model (CAPM), Sun State determined that the required rate of return for a capital budgeting proj

ect it is evaluating is equal to 18 percent. If U.S. Treasury bonds yield 7 percent and the market risk premium is 5 percent, what is the project's beta coefficient?
Business
1 answer:
ANTONII [103]3 years ago
5 0

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.

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Common accounting anomaly fraud symptoms involve problems with various data and books of accounts. Which of the following is NOT
andrey2020 [161]

Answer:

B Inaccuracies in source documents

8 0
3 years ago
A company reported average total assets of $1,240,000 in Year 1 and $1,510,000 in Year 2. Its net operating cash flow was $102,9
cluponka [151]

Answer:

A. Year 1 8.3%

Year 2 9.2%

B. Yes

Explanation:

(1) Calculation for its cash flow on total assets ratio for both years

Using this formula

Cash flow on total assets ratio =Net operating cash flow/Average total assets

Let plug in the formula

Year 1 Cash flow on total assets ratio=$102,920/$1,240,000

Year 1 Cash flow on total assets ratio=8.3%

Year 2 Cash flow on total assets ratio= 138,920/1,510,000

Year 2 Cash flow on total assets ratio= 9.2%

(2) Based on the above calculation YES it's cash flow on total assets improve in Year 2 versus Year 1

5 0
3 years ago
Graphically illustrate (using the WS and PS relations) and explain the effects of an increase in the markup on the equilibrium r
lana66690 [7]

Answer:

When the markup increases, real wage decreases and because of the decrease or the now low real wage the demand for labor at a low cost decreases which leads to a increase in the natural rate of unemployment. In addition the natural rate of unemployment has an inverse relationship with the natural level of employment, therefore, the natural rate of employment will decrease. And the output level will decrease.

Explanation:

See attached picture:

The decrease in real wage is shown by the movement from W/P to W/P'.

The increase in the natural rate of unemployment is shown by the movement from Un to Un' and the new equilibrium is at B.  

4 0
3 years ago
Match the following definitons with appropriate options given in below:
Len [333]

Answer:

1. A graphical representation of the relationship between the price of a good and the amount of the good that buyers are willing and able to purchase at various prices.

-Demand Curve

2. The amount of a good that buyers are willing and able to purchase at a given price.

-Quantity Demanded

3. The claim that, other things being equal, the quantity demanded of a good falls when the price of that good rises.

-Law of Demand

4. A table showing the relationship between the price of a good and the amount that buyers are willing and able to purchase at various prices.

-Demand Schedule

Explanation:

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3 years ago
A $5 million deposit outflow from a bank has the immediate effect of
yuradex [85]

Answer:

C. Reducing deposits and reserves by $5 million.

4 0
3 years ago
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