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aalyn [17]
3 years ago
6

A share of stock with a beta of 0.84 now sells for $69. Investors expect the stock to pay a year-end dividend of $4. The T-bill

rate is 3%, and the market risk premium is 7%.a. Suppose investors believe the stock will sell for $71 at year-end. Calculate the opportunity cost of capital. Is the stock a good or bad buy? What will investors do? (Do not round intermediate calculations. Round your opportunity cost of capital calculation as a whole percentage rounded to 2 decimal places.)Opportunity Cost of Capital ________%?b. At what price will the stock reach an "equilibrium" at which it is perceived as fairly priced today? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Stock price-__________________?
Business
1 answer:
____ [38]3 years ago
7 0

Answer:

Consider the following calculations

Explanation:

r=rf + B X (rm-rf)        

rf=3%          

B=0.84          

rm-rf=7%          

r=8.88%  

       

So, given the market risk premium and beta, the return should be 8.9% by above equation

 

If he buys the stock

         

Total return=Dividend+ capital appreciation  

   

4+(71-69)=6        

Return%=8.70%  (6/69)  

   

Opprtunity cost is 8.9% as given the beta of stock and market risk premium, 8.9% should be the return.

 

But, the above stock is expected to give only 8.7% return (dividend and capital gain), so he should not invest, bad buy.

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Boston Pizza wants to determine how effective its retail space is compared to other pizza establishments in the local area. The
Sidana [21]

Answer:

Answer to this question is 'Sales per square foot'.

Explanation:

To determine the effectiveness of any retail space, the sale per square foot is to be calculated. Sales per square foot is a measure that is used to calculate the revenue that any retail store is able to generate for each foot in their given retail space. Sales per square foot is calculated by dividing 'Total Net Sales' with the 'Total Floor Area' of the given retail store. Therefore, the calculation of the indicator is arrived at by determining the Sales per square foot for its store.

5 0
3 years ago
With respect to the six stages of a quality life cycle, the implementation stage of a new quality initiative is called:_____.
Georgia [21]

With respect to the six stages of a quality life cycle, the implementation stage of a new quality initiative is called adoption.

What is life cycle?

The term life cycle refers to the life are the passes on the different stages such as baby, kids, children, teenager, adult, young, and the last is the old there are the different phases of the life.

There are the six stages of the quality life cycle are the  adoption,  regeneration, energizing, maturation, limitation, or stagnation and decline. The adoption is the implementation stage of a new quality initiative.

As a result, the quality life cycle is the adoption.

Learn more about on life cycle, here:

brainly.com/question/12600270

#SPJ4

5 0
1 year ago
In the 1990s, the technology revolution caused the wide-spread use of information technology in all areas of production, thus im
OverLord2011 [107]

Answer: The aggregate supply curve would shift rightward.

Explanation: When there is a new technological breakthrough that enables a firm to produce at a much lower cost, the aggregate supply curve shifts to the right. During the 1960s Green Revolution when there was improved seeding on basic crops like wheat and rice, by early 1990s, rice and wheat in low-income countries had grown considerably significantly using the Green Revolution seeds; same applies to the harvest that doubled per acre. A technological breakthrough that improves production and reduces production cost would increase aggregate supply - shifts the supply curve to the right - so that more quantity would be produced at any given price.

4 0
3 years ago
Which of the following is a true statement?a. when making decisions about saving and borrowing, people care about the nominal in
luda_lava [24]

Answer:

The answer is: C) A falling interest rate will lead to a movement along the demand curve for loanable funds

Explanation:

When you think about a loan, the interest rate is what you pay for getting the loan. So we can assume the interest rate is the price of the loan.

If the interest rates decrease, it is equivalent to a price decrease. Whenever the price of a good or service decreases, the quantity demanded for that good or service increases.

7 0
3 years ago
Samantha wants to invest her funds and is seeking professional expertise for making investment choices for her. Which investment
Rudiy27

The answer is <u>"A. Mutual funds".</u>


A mutual fund is a professionally overseen investment support that pools cash from numerous speculators to buy securities. These speculators might be retail or institutional in nature.  

Mutual funds have points of interest and drawbacks contrasted with direct putting resources into individual securities. The essential favorable circumstances of mutual funds are that they give economies of scale, a larger amount of broadening, they give liquidity, and they are overseen by expert financial specialists. On the negative side, financial specialists in a mutual funds must pay different charges and costs.

4 0
4 years ago
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