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Author Question: How do interest rates affect the optimal order quantity Q? A) As interest rates increase, Q ... (Read 301 times)

daltonest1984

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on: Jul 10, 2018
How do interest rates affect the optimal order quantity Q?
 
  A) As interest rates increase, Q increases until it reaches a maximum, after which any further
  increase in interest causes a decline in Q.
  B) As interest rates decrease, Q decreases.
  C) As interest rates increase, Q decreases.
  D) None of the above

Question 2

Assume the following information about the market and JumpMasters' stock. JumpMasters' beta = 1.50, the risk-free rate is 3.50, the market risk premium is 10.0. Using the SML, what is the expected return for JumpMasters' stock?
 
  A) 7.50
  B) 13.50
  C) 18.50
  D) 27.00


gasdhashg

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Reply #1 on: Jul 10, 2018
Answer to Question 1

C

Answer to Question 2

Answer: C
Explanation: C) The equation for the SML is E(ri) = rf + (rf + E(rm) - rf  i)
= 3.50 + 1.50  (13.50 - 3.50) = 18.50.


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