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dexar [7]
3 years ago
6

Given an expected market return of 12.0%, a beta of 0.75 for Benson Industries, and a risk-free rate of 4.0%, what is the expect

ed return for Benson Industries?
Business
1 answer:
omeli [17]3 years ago
8 0

Answer:

Re = 10%

Explanation:

using the CAPM formula, the cost of equity is:

Re = risk free + (beta x market premium)

  • risk free = 4%
  • market premium = market return - risk free = 12% - 4% = 8%
  • beta = 0.75

Re = 4% + ((0.75 x 8%) = 10%

Since the beta is lower than 1, this stock is less volatile than the market, that is why the required rate of return is lower than the market return.

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Sarah and Luke each purchased $125 of merchandise from Owens Grocers on account. The terms of both sales were 1/7, n/30. Account
Tatiana [17]

Answer:

Sarah inventory $ 123.75

Luke inventory  $  125.00

Explanation:

<u>Sarah</u>

125 dollars x 1% discount = 1.25 dollars

Inventory:

125 nominal - 1.25 discount = 123.75

Sarah will enter the inventory for the price it paid to acquire it which is 123.75

<u>Luke</u>

As look paid after the discount period the inventory will be valued at nominal:

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7 0
3 years ago
According to the long-run Phillips Curve:
Oxana [17]

Answer:

c. fiscal and monetary policies that impact aggregate demand do not impact the natural rate of unemployment.

Explanation:

Short run Philips Curve is downward sloping, due to inverse relationship between unemployment rate & inflation rate. High economic activity implies more inflation rate, less unemployment. Low economic activity implies less inflation rate, more unemployment.

However, the inverse relationship between inflation & unemployment is only in short run & not in long run. In long run, this inflation - unemployment trade off doesn't exist. So, any fiscal or monetary policy affecting aggregate demand & consecutively inflation rate, do not affect the natural rate of unemployment (combination of frictional & structural unemployment rate) in long run.

7 0
3 years ago
Which of the following describes the expected outcome of expansionary monetary policy in the short run?
Vaselesa [24]

Answer:

The correct answer is letter "A": higher employment, higher output, and a higher price level.

Explanation:

Expansionary policy is a macroeconomic concept that focuses on expanding the economy to counteract cyclical downturns. Expansionary policies can be used through monetary policy to expand the money supply or to increase government expending and tax cuts to stimulate the economy. Under this scenario, interest rates are lower and aggregate demand increases. In that case, employment, output, and price level will be higher. Though, the latter is dangerous since it could lead to high inflation.

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4 0
3 years ago
What is a trade-off?
mojhsa [17]
The best answer is:
C) <span>a choice that must be made due to scarcity.
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