The increase in stock risk has lowered its value by 16.09%.
<h3>What does market price mean?</h3>
- The price at which a good or service can currently be bought or sold is known as the market price.
- The forces of supply and demand determine the market price of a good or service; the price at which the quantity supplied and demanded are equal is the market price.
<h3>What is current price and market price?</h3>
- Market value is another name for the current price. It is the last traded price for a share of stock or any other security.
According to the question:
- If the security's correlation coefficient with the market portfolio doubles (with all other variables such as variances unchanged), then beta, and therefore the risk premium, will also double. The current risk premium is: 13% - 5% = 8%
The new risk premium would be 16%, and the new discount rate for the security would be: 16% + 5% = 21%
If the stock pays a constant perpetual dividend, then we know from the original data that the dividend (D) must satisfy the equation for the present value of a perpetuity:
Price = Dividend/Discount rate.
26 = D/0.13.
D =26 x 0.13.
D = $3.38.
At the new discount rate of 21%, the stock would be worth:
$3.38/0.21.
= $16.09.
The increase in stock risk has lowered its value by 16.09%.
Learn more about market price here:
brainly.com/question/25309906
#SPJ4
Answer:
c. marginal benefit is less than the marginal cost of the good.
Explanation:
Allocation of resources is important in every nation or society because, human wants are unlimited whereas the resources meant to satisfy these wants are in short supply. Therefore, only the most important needs are satisfied before the less important needs. Marginal benefit is the maximum sum of money that consumers are willing to pay for an additional good or service. Marginal cost is the difference in cost when a new or additional unit of goods is produced.
Nations would allocate less to the production of a good when the maximum price consumers are willing to pay for an added unit of that good becomes less than changes in cost when a unit of that good is produced. Marginal benefit reduces when consumption of the good has increased to a reasonable extent. The consumers then lose interest in paying more for that good.
Answer:
The value after seven years from now is $231,216.29
Explanation:
The computation of the expected value would be seven years from now is shown below:
Here we use the future value formula i.e. shown below:
Future value = Present value × (1 + interest rate)^number of years
= $188,000 × (1 + 0.03)^7
= $188,000 × (1.03)^7
= $231,216.29
Hence, the value after seven years from now is $231,216.29
Answer:
Standard deviation = 47.69% (Approx)
Explanation:
Given:
Portfolio of Apple stock w1 = 25% = 0.25
Portfolio of Tesla stock w2 = 75% = 0.75
Standard deviation return Apple σ1 = 35% = 0.35
Standard deviation return Tesla σ2 = 60% = 0.60
Correlation coefficient ρ12 = 0.22
Find:
Standard deviation
Computation:
Standard deviation = √w1²σ1² + w2²σ2² + 2w1σ1w2σ2ρ12
Standard deviation = 0.4769
Standard deviation = 47.69% (Approx)
Answer:
Only the interest amount received is taxable.
Explanation:
CMO refers to Collateralised Mortgage Operation in this whenever one receives a payment it is joint of some principal and remaining amount as an interest.
The principal received only decreases the debt, that is created in a CMO. Thus, is not to be considered as an income in any manner.
Interest received is a part of income as do not decrease the liability of debt, rather increases the revenue, and is therefore, taxable.
