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Citrus2011 [14]
3 years ago
13

The stock of Big Joe's has a beta of 1.64 and an expected return of 13.30 percent. The risk-free rate of return is 5.8 percent.

What is the expected return on the market?
Business
1 answer:
larisa86 [58]3 years ago
7 0

Answer:

expected return on market = 0.10373 or 10.373%

Explanation:

Using the CAPM, we can calculate the required/expected rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.  

The formula for required rate of return under CAPM is,

r = rRF + Beta * rpM

Where,

  • rRF is the risk free rate
  • rpM is the market risk premium

We will first calculate the market risk premium using the required rate of return for stock, beta and risk free rate and plugging these values in the formula above.

0.1330 = 0.058 + 1.64 * rpM

0.1330 - 0.058 = 1.64 *rpM

0.075 = 1.64 * rpM

rpM = 0.075 / 1.64

rpM = 0.04573 or 4.573%

As we know that the beta for market is always equal to 1, we can calculate the rate of return for market as,

expected return on market = 0.058 + 1 * 0.04573

expected return on market = 0.10373 or 10.373%

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ExtremeBDS [4]

Answer:

a.The ending work in process inventory is $ 146,575

Explanation:

To determine the ending work in process inventory, we need to do the following computations:

No of units in ending inventory                                    22,000 units

Material cost in ending inventory

22,000 units * 100 % (completion) * $ 2.65                     $ 58,300  

Conversion costs in ending inventory  

22,000 units * 75 % (completion) * $ 5.35                      <u> $ 88,275</u>

Total value of Ending work in process inventory        <u> $ 146,575</u>

7 0
3 years ago
Distinguish between limited and unlimited liability
ehidna [41]

This relates to liability of business owners. When a company has unlimited liability and starts losing money, the owners can be personally liable for losses meaning their home and personal assets could be lost. Limited liability means they can only lose the amount that they invested in the company and none of their personal assets.

5 0
3 years ago
When Carlos Bustamante received the Alumni of the Year award at his alma mater's annual award dinner, he gave a speech thanking
Angelina_Jolie [31]

Answer: Option B

             

Explanation: In simple words, acceptance speech refers to the speech  that is made by an individual generally after receiving award or similar honor as such.

In such a speech the receiving party shows gratitude and tries to connect with their audience by showing sentiments and proud of receiving the award. These speeches are  usually very brief and to the point but sometimes an extension is made by the deceiving party, stating some past events or making motivational statements to the audience.

In the given case, Carlos revived the award and thanked the school authority. Hence from the above we can conclude that the correct option is B.

7 0
3 years ago
Stock A has an expected return of 10% and a standard deviation of 20%. Stock B has an expected return of 13% and a standard devi
Nina [5.8K]

Answer:

Expected Portfolio return = 0.5(10)+0.5(13)= 5+6.5=11.5%

Expected Portfolio SD= 0.5(20)+0.5(30)= 25%

Beta of A, 10= 5+B(6)

5=6B

B= 5/6= 0.833

B of B, 13=5+B(6)

8=6B

B=8/6

B=1.33

b. Portfolio AB's standard deviation is 25%

c. Stock A's beta is 0.8333

These two statements are correct

Explanation:

3 0
3 years ago
Bramble Corp. has $3960000 of 9% convertible bonds outstanding. Each $1,000 bond is convertible into 30 shares of $30 par value
natta225 [31]

Answer: Credit of $217480 to Paid-in Capital in Excess of Par

Explanation:

The following information is given in the question as:

Debit: Bonds payable = $1,250,000

Debit: Premium on bonds payable = $92480

Credit: Common stock = $1,125,000

Credit: Paid in capital in excess of Par = $217480

The above were calculated as:

Common stock = ($1250,000/$1,000) × 30 × 30

= $1250 × 90

= $1,125,000

% Conversion will be:

= $1,250,000 / $3960000 = 0.32

Unamortized bond premium will then be:

= 0.32 × $289,000

= $92,480

Paid in capital in excess of par will be:

= $1,250,000 + $92,480- $1,125,000

= $217,480

Therefore, the answer will be to

"Credit of $217480 to Paid-in Capital in Excess of Par"

4 0
2 years ago
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