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
nadya68 [22]
2 years ago
13

The market rate of return is 11 per cent and the risk-free rate of return is 3 per cent. Lexant NV has 3 per cent less systemati

c risk than the market and has an actual return of 12 per cent. This equity:
Business
1 answer:
Soloha48 [4]2 years ago
8 0

Answer:

underpriced

Explanation:

Without mincing words, let us dive straight into the solution to the solution to the question. From the above problem, the following data or information are given:

=> market rate of return = 11 per cent, risk-free rate of return = 3 per cent,  Lexant NV = 3 per cent less systematic risk than the market, actual return = 12 per cent.

The expected return = [ 11% - 3%] × 0.97 + 3%  = 10.76%.

We are given the actual return to be 12% which is greater than the expected return which is 10.76%.

The equity is overpriced.

You might be interested in
similar to a stock split, a stock also distributes additional shares of stock to existing stockholders on a pro rata basis at no
Afina-wow [57]

Similar to a stock split, a stock <u>dividend</u> also distributes additional shares of stock to existing stockholders on a pro rata basis at no cost to the stockholders.

A stock split is a decision made by the board of directors of a firm to issue more shares to present owners in order to increase the number of shares outstanding.

A stock split is a division of issued shares in a ratio determined by the company, whereas a stock dividend is a dividend paid in the form of extra shares. While in a stock split, already issued shares are divided in accordance with a predetermined ratio, a stock dividend gives stockholders extra shares.

To know more about Stock Split here

brainly.com/question/24080551

#SPJ4

6 0
1 year ago
What should each person do if the goal is to maximize the amount of fish and coconuts?
asambeis [7]
Are they trying to maximize the amount of fish & coconuts sold or that Is being bought? Can you add more details?
4 0
2 years ago
Sheila went to college to study accounting, and got her first entry-level job right after graduating. however, as she gained mor
Len [333]
Sheila is in the state of realistic period where a person would likely be motivated and pursuing of the things that he or she wanted to do because of her or his personal goals or the idea that he or she has in mind. It could be seen above as she wants to pursue law because of the knowledge that she gains in the area.
8 0
3 years ago
A cartel differs from a monopoly in that ________.
Marrrta [24]
I believe the answer is: B. <span>businesses making the same product agree to limit production.

In a monopoly, only one single business exist that control the production of a certain goods in the market.
For cartel, there are a lot of established businesses with different ownership, but they agreed to control their production in order to maintain the price level in the market.
</span><span /><span>
</span>
3 0
3 years ago
Read 2 more answers
Joe's Hardware is adding a new product line that will require an investment of $ 1 comma 540 comma 000. Managers estimate that t
andrew-mc [135]

Answer:

ARR=15.82%

Explanation:

Joe's Hardware

Cash flow 1,540,000

Average Cash flow =305,000+265,000+(6×230,000)/8

Average Cash flow =305,000+265,000+1,380,000/8

=1,950,000/8

=243,750

ARR= Average Annual Operating Income/ Initial investment

=243,750/1,540,000

ARR=15.82%

6 0
2 years ago
Other questions:
  • Expando, Inc., is considering the possibility of building an additional factory that would produce a new addition to their produ
    13·2 answers
  • An authentication token is a(n):____________
    8·1 answer
  • Sarah can study 20 pages per night. each page has three homework problems. if she studies for 3 nights how many homework problem
    13·1 answer
  • Keithomp, a company that manufactures and exports candies, sells different flavors of candy depending on the taste preferences o
    7·1 answer
  • Core Competencies:
    14·1 answer
  • Which of the following statements is CORRECT? Since depreciation increases the firm's net cash provided by operating activities,
    7·1 answer
  • On July 1, based on prior experience, Rocky estimated there is a 40% chance it will earn the bonus for July tours. It guided a t
    7·1 answer
  • Which of the following arguments are inductive, and which are deductive? Just answer "inductive" or "deductive".
    5·1 answer
  • Charlotte needs to raise money for a charity benefit she is attending. At lunch, she asks her friend, Samantha, to attend the be
    9·1 answer
  • SafeRide, Inc. produces air bag systems that it sells to North American automobile manufacturers. Although the company has a cap
    8·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!