All categories

3 years ago

A security with only diversifiable risk has an expected return that exceeds the riskfree rate of return

Business

1 answer:

fredd [130]3 years ago

6 0

State whether the following is inconsistent with an efficient capital market, the CAPM, or both:

Security with only diversifiable risk has an expected return that exceeds the riskfree rate of return

Answer:

This statement is inconsistent with both.

Explanation:

The statement made in the question is inconsistent with both the Capital Asset Pricing Model (CAPM) and an efficient capital market because both models state that the cost of capital depends only on systematic risk or non-diversifiable risk. Thus the statement contradicts the models of the CAPM and Efficient Capital Market.

You might be interested in

A timeshare developer in pennsylvania is offering prospective buyers $5,000 off their purchase price if the buyer waives the rig

Lady bird [3.3K]

No, per Pennsylvania law, the buyer's right to cancel can't be waived.

A sales and purchase agreement (SPA) is a legal binding agreement between two parties that compels a transfer of funds to occur between a buyer and seller. SPAs are frequently used in real estate transactions, but they are also employed in other commercial transactions. The agreement, which is the result of discussions between the buyer and seller, completes the terms and conditions of the sale. A purchase and sales agreement (SPA) is a binding legal agreement that compels a buyer to buy and a vendor to sell a product or service. SPAs are frequently used in real estate transactions and other situations in which two parties are transacting a sizeable amount of goods.

To know more about SPA refer to brainly.com/question/27180298

#SPJ4

6 0

2 years ago

Use the following compound interest formula to complete the problem. A = P (1 StartFraction r over n EndFraction) superscript n

Tatiana [17]

Credit cards are the card which is given by banks to the customers for withdrawing some amount beyond the account balance. The card I's is increased by $1579.3 than card H.

<h3 /><h3>What is a credit card?</h3>

A credit card refers to a payment mechanism that helps both consumer and commercial business proceedings, including purchases and cash advances.

Computation of credit card's balance:

<u>Amount of </u><u>Card H </u><u>after 3 years:</u>

Given,

Principal(P) = $1,186.44

Interest Rate(r) = 14.74%

Number of time period(n) = 3 years.

Applying the above values in the formula given in the question:

$\text{A} = \text{P}(1+ \dfrac{r}{n} )^n^t\\\\\\\text{A} =\$1,186.44(1+ \dfrac{14.74\%}{3} )^3\\\\\\\text{A}= \$1792.2$

<u>Amount of</u><u> Card I </u><u>after 3 years:</u>

Principal(P) = $1,522

Interest Rate(r) = 12.05%

A number of the time periods (n):

$12\text{Months}\times3\text{Years} = 36 \text{Months}$

Again, apply the above values in the formula given in the question:

$\text{A} = \text{P}(1+ \dfrac{r}{n} )^n^t\\\\\\\text{A} =\$1,522.16(1+ \dfrac{12.05\%}{12} )^3^6\\\\\\\text{A}= \$3,371.58$

Now we take the difference between both the credit cards, we have:

$\text{Amount of Credit Card I}-\text{Amount of Credit Card H}\\\\=\43,371.58-\$1,792.2\\\\=\$1,579.38$

Therefore, card H's balance is decreased by $1579.3 than a card I.

Learn more about credit cards, refer to:

brainly.com/question/14716152

4 0

3 years ago

Which of the following are examples of interest rate futures contracts?

yanalaym [24]

Answer:

Option D, T Bonds and Eurodollars , is the right answer.

Explanation:

Option D is correct because the future contract or interest rate future is the instruments that pay or offer the interest. However, the contract is an agreement on which buyer and seller are agreed for the future delivery of any interest that the asset bears. However, this contract gives the offer to the buyer and seller to lock the price of the asset that bears the interest in a future date. Moreover, this instrument is not a market traded instrument, these are the instrument used for a cash settlement. Thus, the same can be seen with option D. thus it is correct.

4 0

4 years ago

Avocado Company has an operating income of $108,000 on revenues of $1,054,000. Average invested assets are $505,000 and Avocado

TEA [102]

Answer:

$67,960

Explanation:

Residual income = Operating income - (Average invested assets * Cost of capital)

Residual income = $108,000 - ($500,500 * 8%)

Residual income = $108,000 - $40,040

Residual income = $67,960

Thus, the residual income is $67,960

5 0

3 years ago

The owner of Crackers, Inc., produces two kinds of crackers: Deluxe (D) and Classic (C). She has a limited amount of the three i

yulyashka [42]

It’s A because if u multiple the ounces and add them together the make less then 4,800

4 0

4 years ago