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Digiron [165]
3 years ago
9

Suppose the rate of return on short-term government securities (perceived to be risk-free) is about 5%. Suppose also that the ex

pected rate of return required by the market for a portfolio with a beta of 1 is 14%. According to the capital asset pricing model: a. What is the expected rate of return on the market portfolio
Business
1 answer:
Natalka [10]3 years ago
7 0

Answer:

The expected rate of return on the market portfolio is 14%.

Explanation:

The expected rate of return on the market portfolio can be calculated using the following capital asset pricing model (CAPM) formula:

Er = Rf + B[E(Rm) - Rf] ...................... (1)

Where:

Er = Expected rate of return on the market portfolio = ?

Rf = Risk-free rate = 5%

B = Beta = 1

E(Rm) = Market expected rate of return = 14%

Substituting the values into equation (1), we have:

Er = 5 + 1[14 - 5]

Er = 5 + 1[9]

Er = 5 + 9

Er = 14%

Therefore, the expected rate of return on the market portfolio is 14%.

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7 0
2 years ago
On January 1, 2017, Brussels Enterprises issues bonds at par dated January 1, 2017, that have a $3,400,000 par value, mature in
Crazy boy [7]

Answer:

cash 3,400,000 debit

 bonds payable  3,400,000 credit

--to record issuance--

interest expense 153,000 debit

           cash               153,000 credit

--to record first interest payment--

interest expense 153,000 debit

           cash               153,000 credit

--to record second interest payment--

bonds payable   3,400,000 debit

interest expense    153,000 debit

           cash                 3,553,000 credit

--to record last interest payment and maturity --

Explanation:

interest expense for the bonds semianual payment

3,400,000 x 9% x  1 / 2 = 153,000

on maturity will have the interest and principal as cash outlay and we write-off thebonds payable account

7 0
3 years ago
The Dennis Company reported net income of $50,000 on sales of $300,000. The company has average total assets of $500,000 and ave
densk [106]

Answer:

C) 12.5%

Explanation:

The computation of the return on equity is shown below

Return on equity is

= net income ÷ equity

where,

equity is

= Total assets - total liabilities

= $500,000 - $100,000

= $400,000

Now the return on equity is

= $50,000 ÷ $400,000

= 12.50%

Hence, the return on equity is 12.50%

Therefore the corredct option is c.

7 0
3 years ago
As you move through your professional career, you will receive requests for favors and contributions. You will not be able to ho
Minchanka [31]

Answer:

A

Be direct with your response and don't beat around the bush, because that will make the person who has requested something bored and anticipating what has taken you so long to get to the point.

4 0
3 years ago
Rodriguez Company completed its income statement and comparative balance sheet for the current year and provided the following i
Oxana [17]

Answer and Explanation:

The preparation of the operating activities section is shown below:

                                         Rodriguez Company

                             Statement of Cash Flows (partial)

Cash flows from operating activities:  

Net loss $ (6,400)  

Adjustments  

Add: Depreciation expenses $4,500

Add: Amortization of copyright $200

Add: Decrease in accounts receivable $5,000  

Add: Increase in salaries payable $11,000  

Less: Decrease in other current liabilities -$1,800

Net cash flow from operating activities $12,500

The negative sign reflects the cash outflow and the positive sign reflects the cash inflow

3 0
4 years ago
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