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Mazyrski [523]
2 years ago
5

Which of the following statements is CORRECT? a. Two securities with the same stand-alone risk must have the same betas. b. A st

ock's beta indicates its diversifiable risk. c. Diversifiable risk cannot be completely diversified away. d. Lower beta stocks have higher required returns.

Business
1 answer:
sergejj [24]2 years ago
4 0

Answer:

E. The slope of the security market line is equal to the market risk premium

Explanation:

Option A is incorrect because the equity beta is different of two securities though it has same risk level this is because the beta equity is affected by the gearing of the firm

Option B is also incorrect because the beta reflects the risk that is un-diversifiable. Always remember that Capital asset pricing model says that the investor are compensated for the risk that is un-diversifiable which is the business systematic risk.

Option C is also incorrect because the diversifiable risk can be diversified completely by investing in stock of companies of more than 40 industries.

Option D is also incorrect because the lower beta shows lower risk level of the investment and higher risk level indicates higher risk levels.

Option E is correct because the slope indicates the risk premium on the investment and the intercept indicates the risk free investment.

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Suppose the college administrators estimate that the beautification initiative will cost $7,200. To decide whether the initiativ
Gelneren [198K]

Answer: $5,400

Explanation:

The 300 students on average agreed that they would be willing to pay $18 fo the beautification project.

The total monetary value of the benefit of the beautification initiative, as suggested by the survey is the amount that would be accrued if every student paid for the project at their Average Willingness to pay.

This would be,

= 300 * 18

= $5,400

The Total Benefit as suggested by the Survey is $5,400.

NB - The Total Benefit as suggested by the Survey is LESS than the cost of the Survey so the project SHOULD NOT be embarked on.

4 0
2 years ago
Which of the following statements is not true of a strategic inflection point?
Elanso [62]

Answer:

The correct anwer is E) A new CEO is an example of a strategic inflection point.

Explanation:

The statement that "A new CEO is an example of a strategic inflection point" is false since to determine a strategic inflection point we rely on other factors that affect companies such as the power of competitors, the power of customers, the power of potential competitors, the power of suppliers and the power of substitutes.

For example, if my product or service is exceeded 10 times more by the competition in quality or price; we are talking about a strategic inflection point.

8 0
2 years ago
You are the financial manager for a recreation center that has signed an option to purchase new elliptical machines for $22,000
Naddika [18.5K]

Answer:

$19,215.65

Explanation:

To the determine the amount to be invested, we have to find the present value of $22,000 at 7%

P= FV ( 1 + r) ^-n

FV = Future value = $22,000

P = Present value

R = interest rate = 7%

N = number of years = 2

$22,000(1.07)^-2 = $19,215.65

I hope my answer helps you

5 0
2 years ago
​Matthew's Fish Fry has a monthly target operating income of​ $6,600. Variable expenses are​ 80% of sales and monthly fixed expe
Natasha2012 [34]

Answer:

The correct answer is C

Explanation:

Break even Sales is computed as:

Contribution margin ratio = Fixed Cost / Break even Sales

where

Contribution margin ratio = 1 - Variable expense of 80%

= 20%

Fixed Cost is $840

30% = $840 / Break even Sales

Break even Sales = $840 / 20%

= $4,200

The actual sales is computed as:

Actual Sales = (Fixed Cost + Desired Profit) /  Contribution margin ratio

= ($840 + $6,600) / 20%

= $7,440 / 0.2

= $37,200

The margin of safety is computed as:

Margin of Safety = Actual Sales - Break even sales

= $37,200 - $4,200

= $33,000

5 0
2 years ago
Legal action against a company may likely NOT be incurred when ________. a. employees incur injuries during training conducted b
Black_prince [1.1K]

Answer:

c) the company uses small amounts of copyrighted material

Explanation:

According to the fair use doctrine, the government of the US permits uses of the copyrighted material if the amount of copyrighted material is in very small amount and also does not constitutes to unfair advantage over the company which has copyrighted the material formula. Whereas on the other hand, the employer will face legal action if the employee faces any injury at work and this is well addressed in employees right act.

Furthermore, age descrimination is a illegal act so the company will again face legal actions in this case too.

7 0
2 years ago
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