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Alecsey [184]
1 year ago
8

Here are data on two companies. The T-bill rate is 4.8% and the market risk premium is 5.9%. Company $1 Discount Store Everythin

g $5 Forecast return 12 % 11 % Standard deviation of returns 12 % 14 % Beta 1.6 1.0 What would be the fair return for each company, according to the capital asset pricing model (CAPM)? (Round your answers to 2 decimal place
Business
1 answer:
tiny-mole [99]1 year ago
8 0

Answer and Explanation:

The computation of the fair return for each company is shown below:

Fair Return = Risk free rate of return + Beta × market risk premium

= 4.8 + 1.6 × 5.9  

= 14.24%

Now  

Everything $5 is

= 4.8 + 1 × 5.9

= 10.7%

Hence, the same should be considered

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Which of the following systems is especially suited to situations in which the procedure for arriving at a solution may not be f
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8 0
1 year ago
QUESTION 1
babunello [35]
1.) A
2.) True
3.) False
4.) C
5.) C
6.) True
7.) True
8.) C
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5 0
1 year ago
Everything Looks Like a Nail, Inc. is a manufacturing company that produces hammers. The company faces a number of different fix
nikitadnepr [17]

Answer:

a. Regulatory compliance costs  - Fixed cost

b. Salaries of top management and key personnel - Fixed cost

c. Cost of metal used in manufacturing  - Variable cost

d. Cost of wood used in manufacturing  - Variable cost

e. Mortgage payments  - Fixed cost

f. Industrial equipment costs  - Fixed cost

g. Interest on debt  - Fixed cost

h. Postage and packaging costs - Variable cost

Explanation:

The cost which is affected by the production of units is known as variable cost. The cost which does not vary with the units produced is fixed cost. Fixed cost does not change from period to period irrespective of level of output and is usually same for a certain period. It is easy to budget for fixed costs instead of variable cost. Variable cost changes every period and is based on company's output.

6 0
1 year ago
Read 2 more answers
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