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pickupchik [31]
3 years ago
6

Assume that Zonk is a potential leveraged buyout candidate. Assume that the buyer intends to put in place a capital structure th

at has 70 percent debt with a pretax borrowing cost of 14 percent and 30 percent common equity. Compute the revised equity beta for Zonk based on the new capital structure.
Business
1 answer:
ivanzaharov [21]3 years ago
5 0

Answer: 4.35

Explanation:

The revised equity beta for Zonk based on the new capital structure will be gotten as follows:

= 1.13 × [1 + (1 - 35%)][70% /30%]

= 1.13 × [1+(1-0.35)][0.70/0.30]

= 1.13 × [1 + 0.65][2.33]

= 1.13 × (1.65)(2.33)

= 4.35

Therefore, the revised equity beta for Zonk is 4.35.

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A stock has an expected return of 11.2 percent, the risk-free rate is 3 percent, and the market risk premium is 5 percent. What
padilas [110]

Answer:

beta = 1.64

Explanation:

in order to calculate beta, we can use the cost of equity formula:, but instead of cost of equity we can use expected return:

expected return = risk free rate + (beta x market risk premium)

11.2% = 3% + (beta x 5%)

beta x 5% = 11.2% - 3% = 8.2%

beta = 8.2% / 5% = 1.64

in order to calculate beta, we can use the cost of equity formula:

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3 years ago
Which is true about what a customer typically expects from a support technician?
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Answer:

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If the Fed conducts an open-market sale, bank reserves decrease, and the money supply is likely to decrease.

<h3>Open market operations</h3>

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The U.S. Federal Reserve uses open market operations to control the amount of money in circulation by buying and selling bonds and other securities. The Fed can utilize these transactions to increase or reduce the amount of money in the banking system and to raise or lower short-term interest rates, depending on the objectives of its monetary policy.

Learn more about open market operation here:

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