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const2013 [10]
2 years ago
7

Consider the following two stocks, A and B. Stock A has an expected return of 10% and a beta of 1.20. Stock B has an expected re

turn of 14% and a beta of 1.80. The expected market rate of return is 9% and the risk-free rate is 5%. Which security would be considered a good buy?
Business
1 answer:
mina [271]2 years ago
7 0

Answer: Stock B

Explanation:

Use CAPM to calculate the required returns of both stocks.

Stock A

Required return = Risk free rate + beta * ( Market return - risk free rate)

= 5% + 1.20 * (9% - 5%)

= 9.8%

Stock B

Required return = 5% + 1.8 * (9% - 5%)

= 12.2%

Both of them have Expected returns that are higher than their Required returns so both of them are good buys.

The better buy would be the one that has more expected value excess over required return.

Stock A excess = 10% - 9.8% = 0.2%

Stock B excess = 14% - 12.2% = 1.8%

<em>Stock B offers a higher excess and is the better buy. </em>

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An account is defined as a record of the business activities related to a particular item. True or false?.
Natalka [10]

An account is defined as a record of the business activities related to a particular item. The given statement is true.

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Manufacturing, storage, accounting, sales, mergers and acquisitions, the issue of securities, etc. are some examples of business activities. The prompt completion of these tasks enables the businesses to survive and compete in the market.

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brainly.com/question/7924898

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1 year ago
Why should you memorize your social security number rather then carry your social security card in your wallet? Explain why you
kakasveta [241]

Answer:

Hmm.

Explanation:

  • Why should you memorize your social security number rather than carry your social security card in your wallet?

One big reason why you should NOT carry your social security number on you is that you could get robbed at ANY moment. And if someone has your Social security number, then they could slander your name.

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You will need to provide your social security number to employers because they need to make sure that you are you.

<em>'Why do employers need my social security number? If an employer decides to extend you an offer, they will eventually need your social security number to verify your identity and work authorization and perhaps to complete a background check. However, they don't need it in the initial hiring phase.'</em>

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Answer:

1.)  The internal controls which were missing are from the separation of responsibilities. There must have been in place an inner regulator were an individual works with advisers while alternative individual or unit take-care of the expense procedure, then somebody else allow expenses and then office should distribute the expenditures. There is an absence of inner controls as you can realize that the corporation amalgamated with a larger corporation and no one measured other accounts such as Jackson and company any longer.

2.)  With the lack of control, this offered Helen the chance to effect the fraud. With this presence said, she was talented to emulate sign receipts and spend the retailer’s expenditures. She were also the one in responsibility of office the initial and final of accounts. In short, she had several accountabilities that should have remained separated up better and had diverse individuals for the separations of the job. In addition, she needed a bank description from the corporation where she was capable to put the expenditures and pay individual expenditures.

3.)  The method this fraud might be noticed is the inspection squad can ask the bank for reports. They might also conference sellers. The accounting section should have ended sure they were doing the due diligence in dealers and corresponding the receipts with statements and expenditures.

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