1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
hram777 [196]
2 years ago
9

Consider a single period problem where the riskless interest rate is zero, and there are no taxes. A firm consists of a machine

that will produce cash flows of $210 if the economy is good and $80 if the economy is bad. The good and bad states occur with equal probability and the covariance of these states with the market portfolio is zero (no systematic risk). Initially, the firm has 100 shares outstanding and debt with a face value of $50 due at the end of the period. What is the share price of the firm
Business
1 answer:
kifflom [539]2 years ago
8 0

Assuming the firm has 100 shares outstanding and debt with a face value of $50 due at the end of the period. The share price of the firm is $0.95.

<h3>Share price</h3>

First step is to calculate the expected payoff to equity

Expected equity=[($80 ×0.5) + ($210 × 0.5)]-$50

Expected equity=($40+$105)-$50

Expected equity = $145-$50

Expected equity=$95

Now let calculate the share price

Share price=$96/100 shares

Share price=$0.95

Inconclusion the share price of the firm is $0.95.

Learn more about share price here:brainly.com/question/1166179

You might be interested in
Which of the following statements about renting &amp; owning is CORRECT?
elena55 [62]
They b<span>oth share responsibility and control over the property</span>
7 0
3 years ago
Read 2 more answers
Difference between administrative manpower and technical manpower​
saveliy_v [14]

Answer:

Here's ur answer

HAVE A NICE DAY

6 0
2 years ago
Read 2 more answers
BRAINLIEST TO FIRST CORRECT ANSWER TY
Alisiya [41]
10. none of the above.
explanation: all of the reason are applicable for determining the homeowners insurance premium.
11. Whole life insurance
Explanation: whole life insurance, has steady, more expensive premiums than term insurance since it lasts a lifetime and includes fixed death benefits and guaranteed cash value accumulation.
5 0
3 years ago
If the owner of a company withdrew 200 during a period the closing entry for the owner withdrew account would show a
erastovalidia [21]

Answer:

Explanation:

2

4 0
3 years ago
What types of government policies might help to improve the unemployment situation for these would be job seekers?
nikklg [1K]

Answer:

Following are the suggestions to solve unemployment problem:

(i) Change in industrial technique:

(ii) Policy regarding seasonal unemployment:

(iii) Change in education system:

(iv) Expansion of Employment exchanges:

(v) More assistance to self employed people:

(vi) Full and more productive employment

Explanation:

3 0
2 years ago
Read 2 more answers
Other questions:
  • Because colgate owns patent number 5,547,091, only colgate sells toothpaste with a flip-top cap, while others use the more tradi
    10·1 answer
  • The Norton group, a manufacturer of toiletries and cleaning products, uses the name SpakleX, for most of its products in all of
    6·1 answer
  • In the T-bill secondary market the ask yield will normally be less than the bid yield. True or False
    12·1 answer
  • KST Mart has large amounts of customer data. To understand customer purchase behavior, the company uses a process that automatic
    14·1 answer
  • Why is eskom not a profitable company
    9·1 answer
  • GIVEN: It's been reported that the mean height for an American female is 64 inches with a standard deviation of 3 inches, and th
    10·1 answer
  • _____ is a way of producing a response to a stimulus by repeatedly pairing it with another stimulus that automatically produces
    5·1 answer
  • A product enters the maturity phase of the life cycle, during which sales are strong but growth is slowing. What product managem
    8·1 answer
  • Under the "Don't Put all you eggs in one basket" analogy, the eggs represent individual investments and the basket represents th
    13·1 answer
  • The kraft heinz company mainly uses _______ for its mix of products.
    12·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!