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2 years ago

Speedy motors LDTidentify the micro and the macro challenges of SM from the scenario

1 answer:

8 0

Based on the fact that Speedy Motors is in the automotive industry, some micro and macro challenges include:

Macro challenges - Government regulation and Economic growth.
Micro challenges - Lack of liquidity and Retaining good labor.

<h3>What are micro challenges?</h3>

Micro challenges are those that affect a company alone and not the economy.

Companies in the automobile industry face the micro challenge of having poor liquidity because cars might not be sold fast enough. They also have issues with retaining good labor which can help them remain competitive.

<h3>What are macro challenges?</h3>

These affect the economy and industry at large and so affect the company as well.

Some challenges here include government regulation that is aimed at reducing pollution. This will force an auto company to invest in more expensive equipment to comply.

If economic growth is poor, a car company will experience less sales as well.

In conclusion, there are several challenges affecting Speedy Motors.

Find out more on the macro perspective at brainly.com/question/3558688.

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Stock Y has a beta of 1.6 and an expected return of 16.6 percent. Stock Z has a beta of 0.8 and an expected return of 9.4 percen

USPshnik [31]

Answer:

Stock Y is undervalued and Stock Z is overvalued

Explanation:

The Required return on Stock Y = Risk free Rate + BetaY * Market Premium = 5.1% + 1.6%* 6.6% = 15.66%

Expected Return on Y = 16.6%

Here, the Expected return > Required return, the stock is undervalued

Reward to risk Ratio = (Expected return - Risk free rate) / Beta. For Y, Reward to risk = (0.166 - 0.051)/1.6 = 0.115/1.6 = 0.0719 = 7.19%

Required return on Stock Z = Risk free Rate + BetaZ * Market Premium = 5.1 + 0.8 * 6.6 = 10.38%

Expected Return on Z = 9.4%

Here, the Expected return < Required return, the stock is overvalued.

Reward to risk Ratio = (Expected return - Risk free rate) / Beta. For Z, Reward to risk = (0.094 - 0.051)/0.8 = 0.043/0.8= 0.0538 = 5.38%

<em>SML Reward to Risk = 0.066 = 6.6%</em>

Reward to Risk for Y > than SML Reward to Risk, then stock Y is undervalued.

Reward to RIsk for Z > than SML Reward to Risk, then stock Z is overvalued.

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3 years ago

Speedy motors LDTidentify the micro and the macro challenges of SM from the scenario​

Speedy motors LDTidentify the micro and the macro challenges of SM from the scenario