The Inferior Goods Co. stock is expected to earn 13% in a recession, 7% in a normal economy, and lose 6% in a booming economy. T
1 answer:
Answer:
Ans. The expected rate of return on the Inferior Goods Co. stock is 5.90%
Explanation:
Hi, you just have to multiply the expected earnings by the probability of occurance of a certain event and then add up all the products. Here is the information all organized to be processed.
Item Prob Earn
Booming 20% -6%
Normal 55% 7%
Recession 25% 13%
Ok, now let´s calculate the expected rate of return.
So the expected rate of return of the stock is 5.90%
Best of luck.
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Answer:
The correct answer is "$9450".
Explanation:
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Answer:
25%
Explanation:
the margin of safety is the percent of sales which the company is above the break even point.
We solve for the break even point:
BEP = 150,000
We solve for the margin of safety:
$ 200,000 - $ 150,000 = $ 50,000
Now we compare against our sales:
$ 50,000 / $ 200,000 = 0.25