Business, 12.08.2019 21:20 SweetBriar

Schwimmer corp. has a beta of 1.5. the prevailing risk-free rate is 5 percent and the annual market return in recent years has been 11 percent. based on this information, the required rate of return on schwimmer corp. stock is percent.

Answers: 2

Show answers

Answers

Answer from: chrisswid

The formula for casting off the desired rate of return is -

The required rate of return = Risk-free rate + Beta (Market return - Risk-free rate)

= 5% + 1.5 (11% - 5%)

= 5% + 1.5 (6%)

= 5% + 9%

= 14%

Further Explanation

The required rate of return is defined because the minimum rate of return that an investor will accept for holding a company's stock, as compensation for the danger which is related to that stock. this idea is additionally employed in finance, which with the assistance of this profitability of an investment project is analyzed.

The rate of return is obtained in the future, while the risk is defined as the uncertainty of the expected return.

The rate of return is an outcome obtained by an investor by investing his capital for a specified period of time and will get a certain amount of profit on that investment in the future.

Business risk is influenced by various factors, including: Variability of demand for company products. The more stable the company's product sales, assuming other things remain (ceteris paribus), the smaller the business risk. Selling price variability. The easier the selling price changes, the greater the business risk faced. Variability of input costs. The more uncertain the input costs, the greater the business risks faced. The ability to adjust the selling price when there is a change in input costs. The greater the company's ability to adjust sales prices with changes in costs, the smaller the business risk. The level of use of fixed costs (operating leverage). The higher the level of use of fixed costs, the greater the risk of the business.

Learn More

Risk-free rate

Business risk

Details

Grade: High School

Subject: Business

Keyword: risk, rate, business

Answer from: Quest

answer; o anticipate where news will happen;

Answer from: Quest

answer///(d)individual rights of a person are integral to analyzing the morality of action;

Another question on Business

Business, 23.06.2019 00:40

In 2017, "a public university was awarded a federal reimbursement grant" of $18 million to carry out research. of this, $12 million was intended to cover direct costs and $6 million to cover overhead. in a particular year, the university incurred $4 million in allowable direct costs and received $3.4 million from the federal government. it expected to incur the remaining costs and collect the remaining balance in 2018. for 2017 it should recognize revenues from the grant of

Answers: 3

Answer

Business, 23.06.2019 01:00

Corporation had a japanese yen receivable resulting from exports to japan and a brazilian real payable resulting from imports from brazil. gracie recorded foreign exchange gains related to both its yen receivable and real payable. did the foreign currencies increase or decrease in dollar value from the date of the transaction to the settlement date?

Answers: 2

Answer

Business, 23.06.2019 11:00

The average month end closing stock price for company a over the past year is $34.57 with a standard deviation of $4.65. the average month end closing stock price for company b over the same period is $26.15 with a standard deviation of $7.45. based on this data, we can conclude that the stock price for company a is more consistent when compared to the stock price for company b.

Answers: 3

Answer

Business, 23.06.2019 18:00

1. the corporate form of business organization has an advantage over both the sole proprietorship and the general partnership in ease of 2. the corporate form of business organization has an advantage over both the sole proprietorship and the general partnership in external liability for business 3. a partnership is an association of two or more persons to carry on as co-owners a business for 4. any one partner may be held liable for the entire indebtedness of the 5. a limited partner is liable for the partnership debt only to the extent of her capital 6. a person may be a partner even though he has no authority to conduct the ordinary activities of the 7. a partner may withdraw his capital contribution without the consent of all the 8. when a partner sells his interest in the partnership, the buyer becomes a new 9.every partner owes a duty of good faith, fairness, and loyalty to the other 10. a partner who fails to use ordinary care and skill in discharging assigned duties will be personally liable to the partners for any resulting loss.

Answers: 2

Answer

You know the right answer?

Schwimmer corp. has a beta of 1.5. the prevailing risk-free rate is 5 percent and the annual market...

Questions