Business, 31.10.2019 02:31 ivetter5333

Dixon food's stock has a beta of 1.4, while clark café's stock has a beta of 0.7. assume that the risk-free rate, rrf, is 5.5% and the market risk premium, (rm − rrf), equals 4%. which of the following statements is correct? a. if the market risk premium increases but the risk-free rate remains unchanged, dixon's required return will increase because it has a beta greater than 1.0 but clark's required return will decline because it has a beta less than 1.0.b. since dixon's beta is twice that of clark's, its required rate of return will also be twice that of clark's. c. if the risk-free rate increases while the market risk premium remains constant, then the required return on an average stock will increase. d. if the market risk premium decreases but the risk-free rate remains unchanged, dixon's required return will decrease because it has a beta greater than 1.0 and clark's will also decrease, but by more than dixon's because it has a beta less than 1.0.e. if the risk-free rate increases but the market risk premium remains unchanged, the required return will increase for both stocks but the increase will be larger for dixon since it has a higher beta.

Answers: 2

Show answers

Another question on Business

Business, 21.06.2019 17:10

Show the changes to the t-accounts for the federal reserve and for commercial banks when the federal reserve buys $50 million in u.s. treasury bills. if the public holds a fixed amount of currency (so that all loans create an equal amount of deposits in the banking system), the minimum reserve ratio is 10%, and banks hold no excess reserves, by how much will deposits in the commercial banks change? by how much will the money supply change? show the final changes to the t-account for commercial banks when the money supply changes by this amount.

Answers: 3

Answer

Business, 21.06.2019 18:20

Saeed needs money to purchase tools, basic office supplies, parts to refurbish equipment, accounting software, and legal fees. believing saeed's business will be a success, an investor invests $5,000 to saeed open his business. in return, saeed agrees to repay the investor the $5,000 plus 17 percent of the profits of the business. calculate the return on investment for the investor if saeed's business makes $7,000 in profit as a total return of the business in its first year.

Answers: 1

Answer

Business, 22.06.2019 14:30

United continental holdings, inc., (ual), operates passenger service throughout the world. the following data (in millions) were adapted from a recent financial statement of united. sales (revenue) $38,901 average property, plant, and equipment 17,219 average intangible assets 8,883 1. compute the asset turnover. round your answer to two decimal places.

Answers: 2

Answer

Business, 22.06.2019 19:00

James is an employee in the widget inspection department of xyz systems, a government contractor. james was part of a 3-person inspection team that found a particular batch of widgets did not meet the exacting requirements of the u.s. government. in order to meet the tight deadline and avoid penalties under the contract, james' boss demanded that the batch of widgets be sent in fulfillment of the government contract. when james found out, he went to the vice president of the company and reported the situation. james was demoted by his boss, and no longer works on government projects. james has a:

Answers: 3

Answer

You know the right answer?

Dixon food's stock has a beta of 1.4, while clark café's stock has a beta of 0.7. assume that the ri...

Questions