Business, 17.04.2020 23:13 pandadude123

Nile Food's stock has a beta of 1.4, while Elba Eateries' 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-Since Nile's beta is twice that of Elbe's, its required rate of return will also be twice that of Elbe's.
B-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 Nile since it has a higher beta.
C-If the market risk premium increases but the risk-free rate remains unchanged, Nile's required return will increase because it has a beta greater than 1.0 but Elbe's will decline because it has a beta less than 1.0.
D-If the market risk premium decreases but the risk-free rate remains unchanged, Nile's required return will decrease because it has a beta greater than 1.0 and Elbe's will also decrease, and by more than Nile's because it has a beta less than 1.0.
E-If the risk-free rate increases while the market risk premium remains constant, then the required return on an average stock will increase.

Answers: 2

Show answers

Another question on Business

Business, 22.06.2019 11:00

Down under products, ltd., of australia has budgeted sales of its popular boomerang for the next four months as follows: unit salesapril 74,000may 85,000june 114,000july 92,000the company is now in the process of preparing a production budget for the second quarter. past experience has shown that end-of-month inventory levels must equal 10% of the following month’s unit sales. the inventory at the end of march was 7,400 units.required: prepare a production budget by month and in total, for the second quarter.

Answers: 3

Answer

Business, 22.06.2019 12:30

Acorporation a. can use different depreciation methods for tax and financial reporting purposes b. must use the straight - line depreciation method for tax purposes and double declining depreciation method financial reporting purposes c. must use different depreciation method for tax purposes, but strictly mandated depreciation methods for financial reporting purposes d. can use straight- line depreciation method for tax purposes and macrs depreciation method financial reporting purposes

Answers: 2

Answer

Business, 22.06.2019 16:10

The brs corporation makes collections on sales according to the following schedule: 30% in month of sale 66% in month following sale 4% in second month following sale the following sales have been budgeted: sales april $ 130,000 may $ 150,000 june $ 140,000 budgeted cash collections in june would be:

Answers: 1

Answer

Business, 22.06.2019 16:40

Based on what you learned about time management which of these statements are true

Answers: 1

Answer

You know the right answer?

Nile Food's stock has a beta of 1.4, while Elba Eateries' stock has a beta of 0.7. Assume that the r...

Questions