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Anon25 [30]
3 years ago
15

Company A has a beta of 0.70, while Company B's beta is 1.45. The required return on the stock market is 11.00%, and the risk-fr

ee rate is 4.25%. What is the difference between A's and B's required rates of return? (Hint: First find the market risk premium, then find the required returns on the stocks.) Do not round your intermediate calculations.
Business
1 answer:
stira [4]3 years ago
8 0

Answer:

company B's cost of equity is 14.0375% - 8.975% = 5.0625% higher than company A's cost of equity

Explanation:

cost of equity = risk free rate + (beta x market premium)

risk free rate = 4.25%

market premium = market return - risk free rate = 11% - 4.25% = 6.75%

Company A's cost of equity = 4.25% + (0.7 x 6.75%) = 8.975%

Company B's cost of equity = 4.25% x (1.45 x 6.75%) = 14.0375%

this means that company B's cost of equity is 14.0375% - 8.975% = 5.0625% higher than company A's cost of equity.

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Answer:

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Explanation:

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Answer:

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Therefore, when the communication is investigated at the workplace through finding the optimal methods which is set up for the communication network system for the employees who telecommute, states the cybernetic method to communication.

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4 years ago
matt, a shareholder, can run for director by simply placing his name on the company's proxy statement. True or False?​
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Answer:

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