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If D1 = $2.00, g (which is constant) = 6%, and P0 = $40, what is the stock's expected total return for the coming year?
(Points : 5)
10.8%
11.0%
11.2%
11.4%
11.6%
10.8%
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The CAPM difference between systematic and unsystematic risks explains each type and clearly explains what cause each type of risk.
Systematic risks arise from macroeconomic or market segment factor. Such risks are uncontrollable and non-reducible through diversification. Sources of systematic risk may be related to economic growth, interest rate, inflation,...
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ABC Corporation has a beta coefficient of 0.88. If the risk-free rate is 4% and return on the broad market index is 8%; calculate the expected return.
Cost of equity= risk free rate + beta coefficient equity ×(broad market return - risk free rate) Cost of equity= 4% + 0.88 × (8%-4%)4% +0.88×4%= 7.52% Answer= 7.52%
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why should returns to scale decrease when inputs are increasing and technology is large scale.
is it economical to produce when returns to scale is decreasing?
1. There aretwo potential reasons why returns to scale would decrease even if all inputs are increasing. First, it is possible that entrepreneurship might be a limiting factor for the...
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Distinguish between law of diminishing returns to factor and returns to ascale .
Diminishing returns is an effect of increasing input in the short run after an optimal capacity has been reached while at least one production variable is kept constant, such as...
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Capital Asset Pricing Model (CAPM) is the theory that underpins asset pricing. Discuss the assumptions and implications of CAPM and the applications of CAPM.
Assumptions i. Risk-averse investors-diversification is vital to reduce the risks of averse investors. ii. Terminal wealth utility maximization- An investor is trying not to make wealth or return but to optimize his wealth's utility....
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We always hear that Bill Gates has got a lot of money, my argument is whether
Bill Gates would be able to feed Uganda or Kenya for one day with his money?
According to Forbes Bill Gates has got $79.4 Billion. The population of Uganda 34.9 million people The population of Kenya in 2014 was 45.9 million people. Bill Gates would be...
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Given that the cost of sales of a company XYZ for the year 2005 was
ksh 570,000 and the average stock amount to ksh 124,250.
Calculate the stock turnover
The stock turnover is calculated asStock turnover=(Cost of sales)/(Average stock held)=(570,000)/(124,250)=4.59 times
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Fee Founders has preferred stock outstanding that pays a dividend of $5 at the end of each year. The preferred stock sells for $60 a share. What is the preferred stock’s required rate of return?
The preferred stock’s required rate of return is: 5/60 = 0.083 or 8.3%.
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Calculate closing stock and cost of goods sold :
Opening stock ₹ 5000; sales ₹ 16000; carriage inwards ₹ 1000; sales return ₹ 1000;. Gross profit ₹ 6000; purchase ₹ 10,000; purchase return ₹ 900.
1| Calculation of Closing stock:Opening stock ₹ 5000Add: Purchase ₹ 10,000Less: Purchase return ₹ 900Less: Sales ₹ 16000Add: Sales return ₹ 1000Add: Gross profit ₹ 6000Closing stock= ₹ 51002| Calculation...
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