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
tatuchka [14]
2 years ago
7

Desreumaux Inc's stock has an expected return of 12.25%, a beta of 1.25, and is in equilibrium. If the risk-free rate is 5.00%,

what is the market risk premium?
Mathematics
1 answer:
zhenek [66]2 years ago
5 0

Answer:

MRP=\frac{12.25\% -5.00\%}{1.25}=5.8 \%

Step-by-step explanation:

Previous concepts

The Capital Asset Pricing Model (CAPM) is a concept that "analyze the relationship between risk  of any type and the definition of expected return  about the assets".

By definition the Market risk premium is defined as "the difference between the average return and the return on a risk-free".

The value of  \beta represent an adimensional number that allows to measure if we create more/low risk on any investment.  

Solution to the problem

Assuming that we can use the capital asset pricing model we can calculate the market risk premium (MRP) with the following formula:

MRP= \frac{ER -RFR}{\beta}

Where:

ER= Expected return = 12.25 %

RFR= Risk free rate= 5.00%

\beta = 1.25

So then if we replace we got:

MRP= \frac{12.25\% -5.00\%}{1.25}=5.8 \%

You might be interested in
40 divided by 3/8 please asap
Verdich [7]
3/8 = 0.375
40/0.375 = 106 and 2/3
7 0
2 years ago
Trevor tutors French for $12 an hour and scoops ice cream for $8 an hour. He is going to work 20 hours this week. At least how m
Arlecino [84]

Answer:

the answer is 16 hours

Step-by-step explanation:

i just multiplied 12(the amount he gets from tutoring) and multiplied it by different numbers  to see which one gets him past $190

8 0
2 years ago
Dwayne is walking on a straight sidewalk. He spots
Anastasy [175]

Answer:

Skew lines

Step-by-step explanation:

Skew lines are two straight lines in three dimensional space that are neither parallel nor do they intersect Examples of skew lines are the front sidewalk and a line that goes along one of the top edges of the house, or lines that connecting opposite edges of a regular tetrahedron

Other examples of skew lines can be found in non co-planar non parallel, parts of a bridge.

7 0
3 years ago
Hector gave of his money and an additional $1 to Calista. He
trapecia [35]
I think it’s $34 but i’m not sure
6 0
3 years ago
Read 2 more answers
The perimeter of a rectangle is 42 feet the length is 5 feet longer than the width what are the dimensions
Kruka [31]
18.5 x 23.5 is the answer
7 0
3 years ago
Other questions:
  • Frank is building a table. He needs 4 pieces of wood for the table legs. Each piece of wood needs to be 7/8 of a foot long. What
    5·1 answer
  • 0.4(3k – 0.6)<br> plz help
    5·1 answer
  • Solve the equation algebraically |x|=12
    15·1 answer
  • Write a conjecture that relates the result of the process to the original number selected. Represent the original number as n.
    11·1 answer
  • For what value(s) of k will the relation not be a function?<br> A = {(3k−4, 16), (4k, 32)}
    14·2 answers
  • A spinner has 5 equal sections numbered 1 to 5. What is the probability of the spinner stopping on a number that is a multiple o
    11·1 answer
  • Which expression is NOT equivalent to 3^5?
    5·1 answer
  • Yolanda created a scatter plot of the relationship between the number of times she visited different friends each month, y, and
    11·1 answer
  • PLS help
    14·2 answers
  • What is the coordinate of A after a reflection across the given line?
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!