Business, 06.08.2019 02:30 darantjohnson

Suppose the rate of return on short-term government securities (perceived to be risk-free) is about 6%. suppose also that the expected rate of return required by the market for a portfoliowith a beta of 1 is 13%. according to the capital asset pricing model:
a. what is the expected rate of return on the market portfolio?
b. what would be the expected rate of return on a stock with β = 0?
c. suppose you consider buying a share of stock at $40. the stock is expected to pay $3 dividends next year and you expect i t sellthem for $41. the stock risk has been evaluated at β = -.5. is the stock overpriced or underpriced?

Answers: 1

Show answers

Other questions on the subject: Business

Business, 22.06.2019 08:10, alex7881

The last time he flew jet value air, juan's plane developed a fuel leak and had to make an 4) emergency landing. the time before that, his plane was grounded because of an electrical problem. juan is sure his current trip will be fraught with problems and he will once again be delayed. this is an example of the bias a) confirmation b) availability c) selective perception d) randomness

Answers: 1

continue

Business, 22.06.2019 19:00, lonelynomad00

Adrawback of short-term contracting as an alternative to making a component in-house is thata. it is the most-integrated alternative to performing an activity so the principal company has no control over the agent. b. the supplying firm has no incentive to make any transaction-specific investments to increase performance or quality. c. it fails to allow a long planning period that individual market transactions provide. d. the buying firm cannot demand lower prices due to the lack of a competitive bidding process.

Answers: 2

continue

Business, 22.06.2019 20:40, IkweWolf1824

Which of the following would indicate an improvement in a company's financial position, holding other things constant? a. the inventory and total assets turnover ratios both decline. b. the debt ratio increases. c. the profit margin declines. d. the times-interest-earned ratio declines. e. the current and quick ratios both increase.

Answers: 3

continue

Business, 22.06.2019 22:20, jaylaa04

Which of the following best explains why the demand for housing is more flexible than the supply? a. new housing developments are being constructed all the time. b. low interest rates for mortgages make buying a home very affordable. c. the increasing population always drives demand upwards. d. people can move more easily than producers can build new homes.

Answers: 1

continue

You know the right answer?

Suppose the rate of return on short-term government securities (perceived to be risk-free) is about...