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Yuliya22 [10]
3 years ago
13

What is the equity beta for a firm with asset beta equal to 0.9, and D/E ratio of 0.4, and tax rate equal to 35%?

Business
1 answer:
NNADVOKAT [17]3 years ago
3 0

Answer:

the equity beta of the firm is 1.134

Explanation:

The computation of the equity beta is shown below:

Equity beta is

= Asset beta × [1 + (1 - tax rate) × Debt-equity ratio]

= 0.9 × [1 + (1 - 0.35) × 0.4]

= 0 9 × 1.26

= 1.134

Hence, the equity beta of the firm is 1.134

We simply applied the above formula so that the correct value could come

And, the same is to be considered

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According to the CME Group, the market price of the E-mini futures is $2,939.25. Each futures contract delivers 50 times the ind
KatRina [158]

Answer:

E-Mini futures = $2,939.25

Contract Size = 50

Portfolio Value = $10,000,000, Beta 1.5

Target Beta 2, Planning to increase the exposure

Calculation of Number of contracts needed = [Portfolio Size x (Target Beta - Actual beta)] / Contracts Size x Future Price

= (10,000,000 x (2 - 1.5) ] / 50 x 2939.25

= (10,000,000 x 0.5) / 146962.5

= 5,000,000 / 146962.5

= 34.02228459641065

= 34

So, you need to go Long 34 contracts to Increase the exposure.

3 0
2 years ago
The following transactions were completed by the company a. The owner invested $19,000 cash in the company in exchange for its c
satela [25.4K]

Answer:

                      ASSETS                               = LIABILITIES     +  EQUITY  

<u>cash</u>        <u>supplies</u>       <u>equip.</u>        <u>land</u>     =  <u>acc. payable common stock</u>

19,000                                                                                       19,000

-1,500     1,500

                                    12,000                                                  12,000

               400                                                400

<u>-11,000                                           11,000                                                      </u>    

6,500      1,900           12,000       11,000  = 400                     31,000

Explanation:

Dr cash 19,000

    Cr common stock 19,000

Dr supplies 1,500

    Cr cash 1,500

Dr equipment 12,000

    Cr common stock 12,000

Dr supplies 400

    Cr accounts payable 400

Dr land 11,000

    Cr cash 11,000

4 0
3 years ago
An auditor wants to verify that for a given inventory acquisition, (1) the merchandise was ordered by the company, (2) the merch
choli [55]

The answer is: 1. the merchandise was ordered by the company

The auditor could easily obtain this information by looking at the company's purchase order. Purchase order would contain information regarding sellers, types of products, dates, prices, and quantities of the products ordered. This information is what the auditor need to fully verify the inventory acquisition.

5 0
3 years ago
You are an adviser to the Indian government. Until now, government policy in India has been to severely limit imports into India
iVinArrow [24]

Answer:

1. The size of the economy as a whole grows as a result of free trade.

2. Consumers benefit from free trade.

3. Free trade can reduce cost of trading:

Explanation:

The three strongest arguments that you can offer to the Indian government about why the policy shift to freer trade is desirable for India are as follows:

1. The size of the economy as a whole grows as a result of free trade: It provides for more efficient production of goods and services. This is because it encourages goods and services to be created in areas with the finest natural resources, infrastructure, or skills and experience. It boosts productivity, which can lead to greater long-term wages. There is universal consensus that growing global trade has boosted economic growth in recent decades.

2. Consumers benefit from free trade: By removing barriers and promoting competition, it lowers prices. Quality and choice are likely to improve as a result of increased competition.

3. Free trade can reduce cost of trading: Non-tariff barriers can be reduced, resulting in less red tape and lower trading costs. Companies that deal in multiple nations might reduce their compliance expenses by working with a single set of laws. In principle, this will lower the cost of goods and services.

3 0
2 years ago
Operational effectiveness refers to: Group of answer choices matching the benefits of a successful position while maintaining an
Harrizon [31]

Answer:

refers to performing the same tasks better than rivals perform them.

Explanation:

Operational effectiveness is refers to the situation in which the things excel. It helps in the progression of a work and brings change in the output of the company. When the inputs of the organization are used at the best possible way to bring the maximum outputs out of them, the company is said to be experiencing the operational efficiency. In this process the company excels and leaves the competitors behind.

5 0
3 years ago
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