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bulgar [2K]
3 years ago
7

A stock has an expected return of 11.85 percent, its beta is 1.24, and the expected return on the market is 10.2 percent. What m

ust the risk-free rate be? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Business
1 answer:
prisoha [69]3 years ago
3 0

Answer:

The risk free rate is 3.325%

Explanation:

The required rate of return or cost of equity of a stock can be calculated using the CAPM. The CAPM estimates the required rate of return of a stock based on three factors- risk free rate, stock's beta and the market risk premium. The equation of required rate of return under CAPM is,

r = rRF + Beta * (rM - rRF)

Where,

  • rRF is the risk free rate
  • rM is the return on market
  • (rM - rRF) gives us the risk premium of market

We already have the values for r, Beta and rM. Plugging in these values in the formula, we calculate the rRF to be,

Let rRF be x.

0.1185 = x + 1.24 * (0.102 - x)

0.1185 = x + 0.12648 - 1.24x

1.24x - x  =  0.12648 - 0.1185

0.24x = 0.00798

x = 0.00798/0.24

x = 0.03325 or 3.325%

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Answer:

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Explanation:

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Answer:

<u>Validation</u>

Explanation:

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Which of the following describes accrued revenue? (Check all that apply) Multiple select question. The adjustment causes an incr
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Answer:

  • The adjustment causes an increase in an asset account and an increase in a revenue account.
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Explanation:

Accrued revenue refers to cash earned for selling a good or delivering a service yet the cash has not been received and the transaction was not recorded in the books as revenue. This means that the cash has been earned but it has not been billed to the customer it was earned from.

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A cross-functional team is made up of employees from the same hierarchical level but different work areas. They are typically brought together to accomplish a task.

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Different kinds of businesses have various approaches towards how cross-functional teams function. Simply by because of their size, entrepreneurs and small firms usually employ cross-functional teams. Given that they aren't large enough to establish different teams, the majority of projects or choices are made via collaboration between individuals with various areas of expertise.

Learn more about cross-functional teams here:

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