New classical economists believe that an increase in deficit financing by the government will

Ethier Enterprise has an unlevered beta of 1. Ethier is financed with 55% debt and has a levered beta of 1.1. If the risk free r

tresset_1 [31]

Answer:

The correct answer is 0.4%.

Explanation:

According to the scenario, the computation for the given data are as follows:

If no debt, then required return can be calculated by using following formula:

Required return ( no debt) = Risk free rate + Unlevered Beta × Market risk premium

= 6% + 1 × 4%

= 0.06 + 0.04

= 0.10 or 10%

If debt, then required return can be calculated by using following formula:

Required return ( with debt) = Risk free rate + levered Beta × Market risk premium

= 6% + 1.1 × 4%

= 0.06 + 0.044

= 0.104 or 10.4%

So, extra premium required = 10.4% - 10% = 0.4%

6 0

3 years ago

Stock R has a beta of 2.5, Stock S has a beta of 0.55, the required return on an average stock is 13%, and the risk-free rate of

avanturin [10]

Answer:

19.50%

Explanation:

In this question, we apply the Capital Asset Pricing Model (CAPM) formula which is shown below

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

For Stock R

= 3% + 2.5 × (13% - 3%)

= 3% + 2.5 × 10%

= 3% + 25%

= 28.00%

For Stock S

= 3% + 0.55 × (13% - 3%)

= 3% + 0.55 × 10%

= 3% + 5.5%

= 8.50%

The difference would be

= 28% - 8.5%

= 19.50%

3 0

3 years ago

The following is the stockholders' equity section of Harbor Co.'s balance sheet on December 31: Common stock $10 par, 100,000 sh

Murljashka [212]

Answer:

The book value of shares is $10

Explanation:

The balance of shareholders equity is $2,200,000.This comprises of retained earnings of $800,000 and Issued Share Capital of $1,400,000(for 140,000 units of shares)

To ascertain the unit of shares,see below:

45000units= $450,000

15000units reacquired at $150,000

Which also means that $1,100,000 is for 110,000units of shares.

In each of these cases highlighted above share price is $10

for instance:$450,000/45000shares=$10

$150,000/15000=$10 e.t.c

8 0

3 years ago

A cartel is a type of found in many countries. It is an agreement in which businesses agree not to with each other. Unlike many

lubasha [3.4K]

Answer:

C. They tend to produce thing with the same characteristics. Examples would include diamonds and oil.

Explanation:

A cartel is an organization established with a formal agreement between a group of producers of a good or service to regulate supply in order to regulate or manipulate prices.

In another parlance, a cartel is a collection of independent businesses or countries that act together as a single producer and thus fix prices for the goods they produce and the services they render, without competition.

An example of a cartel is The Organization of Petroleum Exporting Countries (OPEC). OPEC is the world's largest cartel. It is a group of 14 oil-producing countries whose purpose is to coordinate and unify the petroleum policies of its member countries and ensure the stabilization of oil markets.

3 0

3 years ago

(02.03 MC) Bernadette wants to set aside some money, but she wants to have easy access to it without penalty. She is not worried

elena-14-01-66 [18.8K]

Answer:

<em>Traditional savings account</em>

Explanation:

A Traditional savings account is a banks or other financial institution's interest-bearing deposit fund.

While these accounts usually pay a moderate rate of interest, their stability and efficiency make them a decent option for short-term saving cash that you want.

Traditional savings accounts have some constraints on how many times one can withdraw money, however they usually offer outstanding versatility that is suitable for developing an emergency savings, or merely sweeping excess cash that you don't need in your checking account so you can earn more interest somewhere else.

8 0

3 years ago