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3 years ago

Historically, the risk an investor is willing to accept, the the potential return for the investment.

Business

1 answer:

iVinArrow [24]3 years ago

3 0

Answer:

The correct option is (A) more, greater

Explanation:

According to the risk return trade off, the risk is increased with the return that means if the returns are increased the risk is also increased and vice versa

So as per the given scenario, if there is more risk that investor wants to accept so the return should be more for the investment. This represents the direct relationship between the risk and return of the investment

hence, the correct option is (A) more, greater

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The current price of XYZ stock is $50.00. Dividends are expected to grow at 7% indefinitely and the most recent dividend was $1.

Lynna [10]

Answer:

Current market price (Po) = $50

Growth rate (g) = 7%

Dividend paid (Do) = $1

Required return (Ke) = ?

Po = Do(1 + g)

Ke - g

$50 = $1( 1 + 0.07)

ke - 0.07

$50 = 1.07

Ke - 0.07

$50(Ke - 0.07) = $1.07

50Ke - 3.5 = $1.07

50Ke = $1.07 + $3.5

50Ke = $4.57

Ke = 4.57/50

Ke = 0.0914 = 9.14%

Explanation:

The current market price of a stock equals current dividend paid, subject to growth rate, divided by the difference between required rate of return and growth rate. The current market price, growth rate and current dividend paid were provided in the question with the exception of the required return (Ke). Thus, the required return becomes the subject of the formula.

8 0

3 years ago

Can someone help me with this please.

Nezavi [6.7K]

There’s no image I think u forgot to insert it

5 0

3 years ago

Read 2 more answers

According to economists, when two people make the exactly opposite decision:

disa [49]

Answer:

b. each person evaluates the situation according to his/her individual self-interest.

Explanation:

This can be generally seen in ancient and modern form of economics where in the course of their works, they can end up countering themselves in the midst of a project.

Here, or in a case of such, a great part of economics deals and accommodates psychology an the both economics that have probably found themselves in the field are expected to evaluate the situation according to each others self interest; especially when knowing the risks, pros and negative effect of the activities that is been carried out.

Secondly, this model is a useful measurement device by which economic situations can be evaluated and also levels of competition that exist in real markets can be checked.

6 0

4 years ago

Forester Company has five products in its inventory. Information about the December 31, 2021, inventory follows. Product Quantit

zaharov [31]

Answer:

A 1,000 x $26.00 = $ 26,000

B 500 x $30.60 = $ 15,300

C 900 x $ 19.00 = $ 17,100

D 900 x $ 19.80 = $ 17,820

E 800 x $26.10 = $ 20,880

Total $ 97,100

102,240

Write-down at NRV 1,060 debit

Inventory 1,060 credit

Explanation:

We have to calculate the net realizable value(NRV) for each item and compare with the historic cost:

Units// Cost /// NRV

A 1,000 $ 26 $ 32(1 - 0.1) = 28.8

B 500 $ 31 $ 34(1-0.1) = 30.60

C 900 $ 19 $ 24(1-0.1) = 21.60

D 900 $ 23 $ 22(1-0.1) = 19.80

E 800 $ 30 $ 29(1-0.1) = 26.10

We will always pick the lowest to valuate the goods:

A 1,000 x $26.00 = $ 26,000

B 500 x $30.60 = $ 15,300

C 900 x $ 19.00 = $ 17,100

D 900 x $ 19.80 = $ 17,820

E 800 x $26.10 = $ 20,880

Total $ 97,100

Total Cost:

1,000 x 26

+ 500 x 31

+ 900 x 19

+ 900 x 23

+ 800 x 30

103,300

Total NRV

1,000 x 28.80

+ 500 x 30.60

+ 900 x 21.60

+ 900 x 19.80

+ 800 x 26.10

102,240

Comparing at the entire inventory level we get the following adjustment

103,300 - 102,240 = 1,060

4 0

3 years ago

The stock price of Bravo Corp. is currently $100. The stock price a year from now will be either $160 or $60 with equal probabil

slavikrds [6]

Answer:

correct option is $38.21

Explanation:

given data

stock price = $100

stock price = either $160 or $60

interest rate = 6%

exercise price = $135

solution

we get here Hedge ratio that is express as

Hedge ratio = (Pay off in case price appreciates - Pay off in case price depreciates) ÷ (Appreciated price - Depreciated price) ..................1

put here value we get

Hedge ratio = ( Max [$135 - $160, $0] - Max[$135 - $60, $0]) ÷ ($160 - $60)

Hedge ratio = $\frac{$0 - $75}{$100}$

Hedge ratio = - 0.75

so here Price of Put option is

Price of Put option = -Hedge ratio × {Appreciated price ÷ (1 + risk free rate) - Present stock price}

Price of Put option = -(-0.75) × $\frac{160}{1+0.06} - 100$

Price of Put option = $38.21

so here correct option is $38.21

7 0

3 years ago

Historically, the ________ risk an investor is willing to accept, the ________ the potential return for the investment.

Historically, the risk an investor is willing to accept, the the potential return for the investment.