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
Sonja [21]
3 years ago
8

Wild Swings Inc.’s stock has a beta of 2.5. If the risk-free rate is 6% and the market risk premium is 7%, what is an estimate o

f Wild Swings’ cost of equity?
Business
1 answer:
Bess [88]3 years ago
3 0

Answer:

r = 0.235 or 23.5%

Explanation:

Using the CAPM, we can calculate the required/expected 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 * rpM

Where,

  • rRF is the risk free rate
  • rpM is the market return

r = 0.06 + 2.5 * 0.07

r = 0.235 or 23.5%

You might be interested in
Suppose that after hurricane​ Irene, the average income in Cape​ Charles, Virginia decreased by 16 percent. In response to this
SIZIF [17.4K]

Answer:

0.875

Explanation:

The income elasticity of demand measures the responsiveness of quantity demanded to changes in income.

Income elasticity of demand = percentage change in quantity demanded / percentage change in income

14% / 16% = 0.875

Demand is inelastic because the coefficient of elasticity is less than one.

I hope my answer helps you

3 0
3 years ago
Ambrin Corp. expects to receive $2,000 per year for 10 years and $3,500 per year for the next 10 years. What is the present valu
sineoko [7]

Answer:

A. $19,034

Explanation:

The computation of the present value for 20 years cash flow is shown below:

For the First 10 years

Given that

Payment for first 10 years = $2,000

Discount rate = 11%

Now the present value is

= $2000 ÷ 1.11 + $2,000 ÷ 1.11^2 +...........+ $2,000 ÷1.11^10

= 11,778.46402 ..............(1)

For the Next 10 years

Given that

Payment for next 10 years = 3,500

Discount rate = 11%

Now the present value is

= $3,500 ÷ 1.11 + $3,500 ÷ 1.11^2 +...........+ $3,500 ÷ 1.11^10

= 20,612.312

So, today present value is

= $20,612.312 ÷ 1.1110

= 7,259.339 ...........................(2)

Now

Total present value is

= $7,259.339 + $11,778.46402

= $19,034

3 0
3 years ago
How did the new world discovery build an interdependent global economic system? what were the distinctive roles played by europe
Anna35 [415]

New world discovery build an interdependent global economic system where each continent relied on the others to thrive. Role of Europe was to supply markets, capital, technology, Africa was to supply labor and America supplied raw materials (like metal and soil for sugar cane)

More about interdependent economic system:

Economic interdependence refers to the mutual reliance of those involved in an economic system who trade in order to receive the goods they are unable to create effectively on their own.

Such trading connections demand that a participant's actions have an impact on its trading partners, and it would be expensive to end the relationship.

Learn more about interdependent economic here:

brainly.com/question/4745456

#SPJ4

7 0
1 year ago
Attention!!! Auction is about to happen!!!!!<br><br> 1st one=50minecoins<br> 2nd=60minecoins
artcher [175]

Answer:

lol

Explanation:

4 0
2 years ago
Read 2 more answers
An analysis of the stability or instability of a government is an example of scanning which environment?
Mnenie [13.5K]

An illustration of scanning the political environment is determining if a government is stable or unstable.

The political environment describes variables that affect businesses that are external to the corporation and have to do with a nation's government or public affairs. Here, the term "government" is used broadly. It can be used to refer to the federal government, state governments, local governments, government agencies, and independent government organisations like Bank Indonesia and the Financial Services Authority. Transnational organisations like the World Trade Organization, IMF, and World Bank can also be included in this group under rare circumstances. In a more general sense, the term also refers to various organisations that are in charge of enacting laws and regulations. Risks might be very high when the political environment changes. They might put the business's plan at danger. Examples include conflict, unrest in politics, and corruption.

Learn more about political environment here

brainly.com/question/15697860

#SPJ4

7 0
1 year ago
Other questions:
  • Pauline Found​ Manufacturing, Inc., is moving to kanbans to support its telephone​ switching-board assembly lines. Determine the
    8·1 answer
  • True or false? the risk of investing in junk bonds is usually lower than the risk of investing in cds.
    11·1 answer
  • The Turtle Society, a nongovernmental not-for-profit organization, receives numerous contributed hours from volunteers during it
    8·1 answer
  • Suppose that the real exchange rate between the United States and Kenya is defined in terms of baskets of goods. Which of the fo
    7·1 answer
  • If a bank pays 62 cents in non-interest expense per dollar of income, its _______ is equal to 0.62
    9·1 answer
  • On November 1, 2021, Taylor signed a one-year contract to provide handyman services on an as-needed basis to King Associates, wi
    13·1 answer
  • Do you think it is easier or harder to be ethical in a leadership role?​
    13·1 answer
  • If the unemployment rate is 5.8% and the number of unemployed persons is 15 million, the labor force is approximately:__________
    14·1 answer
  • Which is needed for a w2 form?
    14·1 answer
  • in 2022, a taxpayer (with $26,500 of employee compensation) was allocated $176,000 of self-employment income. calculate the amou
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!