A stock with a beta of 2.0 has an expected rate of return of 13.15%. the risk-free rate in the market is 3.30%. what is the market premium? assume capm is true.

Answers

Answer 1

The capital asset pricing model of the question is 1.15.

What is the Capital asset pricing method?

The value of a security is determined by the Capital Asset Pricing Model, or CAPM, based on the projected return in relation to the risk investors take when purchasing that security.

The formula for CAPM:

Following is the CAPM formula:

Beta i + R f = E(R i)

(E(R {m})-R {f})

The CAPM formula is:

The expected return on investment is equal to the risk-free rate plus the beta (or risk) of the investment multiplied by the market's anticipated return minus the risk-free rate (the difference between the two is the market risk premium).

The answer is calculated as:

Rf plus beta Equals CAPM* (Rm-Rf) E(r) equals 13.5% 3.3 percent

Rf Beta = ? Rm-Rf, sometimes referred to as market risk premium, is equal to 8.8%. 13.5 % = 3.3 + beta (8.8 percent ) beta = 13.5 percent - 3.3 percent (8.8 percent ) 10.2% is equal to beta (8.8 percent ) Beta = 10.2% / 8.8% = 1.15909

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Related Questions

the local government is concerned about poverty so it institutes a minimum wage of $9 per hour. if the demand and supply for labor are given in the graph, there will be

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We can actually deduce here that from the statement given, if the demand and supply for labor are given in the graph, there will be: A surplus of 6 workers.

What is demand and supply?

Demand actually refers to what customers actually want in the market and how they go for it. While supply refers to the availability of goods and services in the market to meet with the customer's demands.

We can actually see here that demand and supply determine the price of goods and services.

Also, the payment for labour is high, the supply for labour will be high but the demand for labour may likely decrease.

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How did the Market Revolution change the role of work for women? Question 5 options: It provided the opportunity for some women to work in mill towns instead of their family's farm It provided the opportunity for some women to work on their family's farm instead of a factory Allowed women to become stay at home wives Allowed women to get an education

Answers

The Market Revolution change the role of work for women because It provided the opportunity for some women to work in mill towns instead of their family's farm.

What is the Market Revolution?

It refers to the period of marketplace expansion throughout the early america that brought distance communities together and created a specialized and interdependent economy.

During the period, the role of work for women changed because It provided the opportunity for some women to work in mill towns instead of their family's farm.

Therefore, the Option A is correct.

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what is the best way to prevent underage alcohol sales

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The best way to prevent underage alcohol sales is to:

Ask every guest who might be underage for a valid ID.

What is Underage Drinking?

Underage drinking occurs when a person who is below the legal age of drinking indulges in alcohol.

When young people who are below the legal age of drinking approach a store manager, the best thing to do will be to ask for their official means of identification. If this is below the recommended age then it will not be ideal to sell to them.

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Beta and Gama Inc. produces an item that currently sells for $250 per unit. Current production costs per unit includes direct materials of $30, direct labor of $25, variable overhead of $15, fixed overhead of $20, and total production costs of $90. Beta and Gama Inc. has received a special pricing offer from a nonprofit organization to buy 1,000 units at $200 per unit. Beta and Gama Inc. is currently operating at its full production capacity. Based on the scenario, Beta and Gama Inc. should Blank______.

Answers

The answer should be $30

For accounting purposes, postdated checks (checks payable in the future) are considered to be

Answers

The postdated checks are considered to be an accounts receivable for accounting purpose.

What is a postdated checks?

These are checks that is expected to make a payment to be processed on a specified date in the future.

However, in accounting, the postdated checks are considered to be an accounts receivable by a firm for accounting purpose.

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Differentiation for most consumer brands can be based on.

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Features, performance, or style and design, is differentiation for most consumer brands can be based on.

What differentiate the product from other products?

Products can be differentiated from one product to another there are many features that apply to the product like the packaging, design, uses and specification, materials. They are also differentiated by the trademark and company.

Thus, Features, performance, or style and design.

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The major difference between a low-cost provider strategy and a focused low-cost strategy is the a. amount of outsourcing involved. b. length of the managerial experience curve. c. size of the buyer group to which a company is appealing. d. number of upscale attributes incorporated into the product offering. e. production methods being used to achieve a low-cost competitive advantage.

Answers

The major difference between a low-cost provider strategy and a focused low-cost strategy is the size of the buyer group to which a company is appealing.

What is a strategy?

These are devices company employ to achieve their medium and long term objectives.  It is an action that managers embark on so that organization's goals can be achieved.

It is to be noted that strategy, as a plan of action can be middle and long term desired goals.

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which points of the production possibilities curve show a level of production that would be achievable only through further growth in the company

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Key model. The Production Possibilities Curve (PPC) is a model that captures scarcity and the opportunity costs of choices when faced with the possibility of producing two goods or services. Points on the interior of the PPC are inefficient, points on the PPC are efficient, and points beyond the PPC are unattainable.

How quickly must you file a report with the michigan dnr if property damage exceeds $2,000?.

Answers

The amount of time that is allowed before filing a report with the Michigan Dnr if property damage exceeds $2,.000 is 5 days.

What is Insurance?

This refers to the coverage that a product or service has and subscribed for that is covered in the event of theft, loss, or other unforeseen circumstance.

Hence, we can see that in the case of property damage, the maximum amount of time given to file to the Michigan DNR is five days if the damage to the vessel and other property damage totals more than $2,000.

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Consumers experience ______ marginal utility the more they consume of a particular good or service.

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Consumers experience diminishing marginal utility the more they consume of a particular good or service.

Marginal utility is the added satisfaction that a consumer gets from having one more unit of a good or service. The concept of marginal utility is used by economists to determine how much of an item consumers are willing to purchase.

Positive marginal utility occurs when the consumption of an additional item increases the total utility. On the other hand, negative marginal utility occurs when the consumption of one more unit decreases the overall utility.

The law of diminishing marginal utility states that all else equal, as consumption increases, the marginal utility derived from each additional unit declines.

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In the context of brand extensions, stretchability of a brand depends on: a. preventing the transfer of meaning from the new branded product to the original brand schema. b. consumers' ability to process relationships between the parent brand and associated products. c. consumers' rejection of the fit between the parent brand and other products on which it appears. d. finding consumers with the same degree of liking for a parent brand. e. the usage differences between parent brand and associated products.

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The answer should be A

__________ is important for devloping self-reglation and promoting language. Varying rates. Motivation. Play. Secure relationships. Challenged. Screening tool. I will mark brainlest

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Answer:

Motivation.

Explanation:

please mark me brainlist

The government raises money on the federal level through which taxes? check all that apply.

Answers

The different ways the government raises money in the federal level are:

Income taxes, Tariff Taxes, Occupational Taxes, Excise Taxes, Corporate Taxes.

What is Taxation?

This refers to the process of collecting taxes from people in a given population in order to solve a social problem and increase the standard of living.

Hence, we can see that the government raises money through different types of taxes and they include: Income taxes, Tariff Taxes, Occupational Taxes, Excise Taxes, Corporate Taxes.

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What does the release of earnings announcements

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The release of earnings announcements and economic indicators are similar because c) both are estimated in advance by analysts.

Why are earnings announcements analyzed?

Earnings announcements help determine the value of a company and so they are analysed to help people decide if they can invest and make a capital gain.

Economic indicators are also analyzed with the goal being to predict where the economy is going and what to do about it.

The full question and options are:

What does the release of earnings announcements have in common with the release of economic indicators?

a) Both are typically released on a quarterly basis.

b) both are typically published by corporations

c) both are estimated in advance by analysts

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Which of the following is not a business transaction? a.Erin purchased hedge trimmers for her lawn service agreeing to pay the supplier next month. b.Erin deposits $15,000 in a bank account in the name of Erin's Lawn Service. c.Erin provided services to customers earning fees of $600. d.Erin pays her monthly personal credit card bill.

Answers

(D) Erin pays her monthly personal credit card bill.

What is a business transaction?A business transaction is an economic event involving a third party that is documented in the accounting system of an organization. Such a transaction needs to have a monetary value. Purchasing insurance from an insurer is an illustration of a business transaction acquiring stock from a vendor.What is a credit card?A credit card is a payment card that is given to customers so they can pay a merchant for products and services based on the debt they have accumulated.

Since Erin paying her credit card is her personal transaction.

Therefore, the answer will be (D) Erin pays her monthly personal credit card bill.

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A company just starting business made the following four inventory purchases in June: Date Number of units purchased Total cost June 1 120 units $ 420 June 10 150 units 600 June 15 150 units 570 June 28 200 units 270 $1860 A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand. Using the average-cost method, the amount allocated to the ending inventory on June 30 is

Answers

The cost of ending inventory is $630.

What is the value of ending inventory?

The average inventory method entails using the average cost of the total inventory purchased to determine the value of the ending inventory.

Average cost = total cost / total units purchased

1860 / (120 + 150 + 150 + 200) = $3

Cost of ending inventory = 210 x 3 = $630

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A distribution of a company's accumulated prior earnings is a(n) ______.

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The distribution of a company's accumulated prior earnings is a dividend.

What are dividends?

Dividends are portion of money earned that are distributed to shareholders of such company.

These are offered mainly in form of cash and very crucial to shareholders for them to know the state of the finances of such business.

Hence we can conclude that the distribution of a company's accumulated prior earnings is a dividend.

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Four companies computed their days' sales in inventory as follows: Company A: 47.2 Company B: 36.5 Company C: 45.1 Company D: 39.4 Which company is the most efficient and effective in managing its inventory

Answers

The most efficient and effective in managing its inventory is Company B.

Who is the most efficient?

The days' sales in inventory  is a financial ratio that measures the rate at which a firm is able to sell its inventory in a given year. The lower the ratio, the more efficient a firm is in selling its inventory.

Days' sales in inventory = number of days in a period / inventory turnover

Inventory turnover =  cost of goods sold / average inventory

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An open market sale of U.S. Treasury bonds by the central bank will ________ credit conditions for private firms.

Answers

An open market sale of U.S. Treasury bonds by the central bank will ease credit conditions for private firms.

What is Open Market Sale?

Open Market Sale means a sale of shares of Common Stock pursuant to a "brokers' transaction" within the meaning of Section 4(4) of the Securities Act or in a transaction directly with a "market maker", as that term is defined in Section 3(a) (38) of the Exchange Act.

The most commonly used tool of monetary policy in the U.S. is open market operations. Open market operations take place when the central bank sells or buys U.S. Treasury bonds in order to influence the quantity of bank reserves and the level of interest rates. The specific interest rate targeted in open market operations is the federal funds rate. The name is a bit of a misnomer since the federal funds rate is the interest rate charged by commercial banks making overnight loans to other banks. As such, it is a very short-term interest rate, but one that reflects credit conditions in financial markets very well.

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When going downhill, a truck's momentum makes it ____ so you'll have to ____ to pass it

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When going downhill, a truck's momentum makes it go faster so you'll have to speed up to pass it.

What is a momentum?

momentum can be expressed as the  product of the mass of a particle as well as the velocity of the object .

Momentum serves as  vector quantity because of its magnitude as well as direction, hence, When going downhill, a truck's momentum makes it go faster.

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The ""invisible hand"" works to promote general well-being in the economy primarily through:.

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The "invisible hand" works to promote general well-being in the economy primarily through people's pursuit of self-interest. therefore, Option A is the correct statement.

How does the Invisible Hand work?

The invisible hand is a part of laissez-faire, which means the "let do/permit go," method in the marketplace. In different words, the method holds that the marketplace will discover equilibrium without authorities or different interventions forcing it into unnatural patterns.

The complete information about the question is given below:

a. people's pursuit of self-interest.

b. the political process.

c. government intervention.

d. altruism.

therefore, The "invisible hand" works to promote general well-being in the economy primarily through people's pursuit of self-interest. Option A is the correct statement.

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What is Amazon's WACC? Note: Amazon does not have r preferred stock. Apply the CAPM to estimate the cost of equity using the expected market return and risk-free rate from the Walmart WACC estimate. Answer to 2 decimal places in % format w/o % sign.

Answers

Hence, 0.21 is the amount of taxes that were mentioned in the Walmart example, in addition to 0.66 percent and 12.70 percent.

What is Amazon's WACC?

1.1634= bond from line

Generally, the cost of equity is  mathematically given as

Using the CAPM to estimate the cost of equity using the expected market return and risk-free rate from the Walmart WACC we have

C.E=R+[tex]\beta[/tex] (ER-R)

Where

R=risk free rate

[tex]\beta[/tex] = beta of the investment

(ER-R)=market risk premium

Therefore, from the Walmart WACC

CE=0.66%+1.1634*(12.7%-0.66%)

CE=14.68%

Generally, the Market value is  mathematically given as

MV= 1,215,500,000,000

Generally, the cost of debt is  mathematically given as

CD= 37,855,403,701.28

Hence

Total value= 1,215,500,000,000+37,855,403,701.28

Total value= 1,253,355,404,000

[tex]Weight of equity= \frac{1,215,500,000,000}{1,253,355,404,000}*100[/tex]

Weight of equity= 96.98%

[tex]Weight of debt= \frac{37,855,403,701.28}{1,253,355,404,000} *100[/tex]

Weight of debt=3.02%

Therefore

0.969814*0.68+0.03020.014*(1-0.21) = 14.27%

Hence, 0.21 is the amount of taxes that were mentioned in the Walmart example, in addition to 0.66 percent and 12.7 percent.

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As inventory and property plant and equipment on the balance sheet are consumed, they are reflected: Select one: A. As a revenue on the income statement B. As an expense on the income statement C. As a use of cash on the statement of cash flows D. On the balance sheet because assets are never consumed E. Both B and C because the financial statements articulate

Answers

Inventory and property, plant, and equipment are shown as an expense on the income statement and on the balance sheet, respectively.

What is a balance sheet?

A balance sheet is a financial statement that lists an organization's assets, liabilities, and shareholder equity. One of the three important financial statements a company's evaluation will focus on is the balance sheet.

The income statement and balance sheet both directly and indirectly refer to the expenses. You can better understand how an expense is reflected overall by often reading a company's income statement and balance sheet.

As a result, option (b) is correct.

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Tell me about a time you tried to sell a customer, teammate, or someone else on an idea, product, or service. describe the situation, your actions, and the outcome
will give brainliest answer
does not have to be work related

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To try to sell a product or idea we must use valid arguments and connect attitudinally with the people to whom we offer them.

What is a sale?

A sale is a transaction in which a product or service is exchanged for money.

What experiences do we have selling something?

One experience we have selling something was when we built some wooden toys to sell to my friends and family as Christmas souvenirs.

For them I had to call them and send them an email with pictures of the toys. In general, we highlighted the most striking features of the toys and had a positive attitude to convince buyers.

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Assume that you hold a well-diversified portfolio that has an expected return of 10.0% and a beta of 1.50. You are in the process of buying 2,000 shares of Omega Corp at $10 a share and adding it to your portfolio. Omega has an expected return of 15.0% and a beta of 1.75. The total value of your current portfolio is $80,000. What will the expected return and beta on the portfolio be after the purchase of the Omega stock

Answers

Based on the expected returns and beta of the portfolio and investment, after the purchase of omega stock, the expected return is 11% and the beta is 1.55.

What is the expected return?

Find the value of the Omega stock:

= 2,000 x 10

= $20,000

The total value of the new portfolio is:

= 80,000 + 20,000

= $100,000

Expected value is:

= (80,000 / 100,000 x 10%) + (20,000 / 100,000 x 15%)

= 8% + 3%

= 11%

What is the beta?

= (80,000 / 100,000 x 1.50) + (20,000 / 100,000 x 1.75)

= 1.2 + 0.35

= 1.55

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What are the goals when a government uses expansionary monetary policy? check all that apply.

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The goals when a government uses expansionary monetary policy are

Increasing its money supply to boost the economy.Increasing its money supply to speed business expansion.Decreasing its interest rates to increase investment spending.

What is expansionary monetary policy?

This is when a government relax its control on the volume of money supply in an economy.  The purpose of the policy is to expand money supply and also lowers short-term interest rates.

It is to be noted that expansionary monetary policy is intended to promote more economic activity.

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N.B

Please see complete question below:

What are the goals when a government uses expansionary monetary policy? Check all that apply.

Increasing its money supply to boost the economy

Decreasing its money supply to slow the economy

Increasing its money supply to speed business expansion

Decreasing its money supply to curb business expansion

Decreasing its interest rates to increase investment spending

Answer:

A) increased available credit

C) increased money supply

F) decreased interest rate

Explanation:

got right

Which trim level is available exclusively for customers who participate in the 2023 ariya reservation program?.

Answers

The PLATINUM+ e-4ORCE is the trim level that is available exclusively for customers who participate in the 2023 Ariya reservation program.

What is the Ariya reservation program?

The reservation program is organized by Nissan firm to the public.

In conclusion, the PLATINUM+ e-4ORCE is said to be the trim level that is available exclusively for customers who participate in the 2023 Ariya reservation program.

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A low-cost leadership strategy becomes competitively powerful when a. buyers of the product or service use the product or service in the same ways. b. the offerings of rival firms are essentially unique, different, and customized to end users. c. price competition among rivals is absent. d. buyers prefer that the products/services of competing sellers have widely varying attributes and prices. e. buyers have high switching costs.

Answers

The strategy of low-cost leadership becomes powerful when the buyers of the product/service use the product/service in the same ways.

What is a low-cost leadership?

This is a pricing term that means that organization are looking for strategy on becoming a leader in providing low-cost products to its customers.

However, the strategy of low-cost leadership becomes competitive powerful when the buyers of the product/service use the product/service in the same ways.

Therefore, the Option A is correct.

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On April 1, Griffith Publishing Company received $1,908 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. The subscriptions started immediately. What is the amount of revenue that should be recorded by Griffith Publishing Company for the first year of the subscription assuming the company uses a calendar-year reporting period

Answers

The amount of revenue that should be recorded by Griffith Publishing Company for the first year of the subscription is: $477.

Amount of revenue

Using this formula

Revenue= Received amount × Number of months ÷ Number of subscription months

Let plug in the formula

(April 1- December 31= 9 months)

Revenue= $1,908× 9 months ÷ 36 months

Revenue= $477

Therefore  The amount of revenue that should be recorded by Griffith Publishing Company for the first year of the subscription is: $477.

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Which of these is a major advantage of a market economy?
Select one:
1.There is efficient government control of production and
distribution.
2.It can change direction rapidly when needed as markets change.
3.People are likely to be offered goods and services they can't
afford.
4.There is a high degree of individual freedom.

Answers

These is a major advantage of a market economy is it can change direction rapidly when needed as markets change. Thus second option is correct.

What is Market Economy?

Market Economy refers to the economy in which the prices of the goods and services are determined by the two market forces that are supply and demand.

There is a less control of the government in the market economy and therefore all the decisions are taken by the private individuals. Thus option 1st is incorrect.

The Prices of the goods and services are determined by the supply and demand forces and the prices are kept as per the affordability of the customers. Thus option 3rd is also incorrect.

Therefore the correct option is 2nd one as the market changes the price of the good and services are also effected and get changed.

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