This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Nile Foods stock has a beta of 1.5, while Elba Eateries stock has a beta of 0.5. Assume that the ... (Read 116 times)

booty5

  • Full Member
  • ***
  • Posts: 146
on: Aug 7, 2023
Nile Foods’ stock has a beta of 1.5, while Elba Eateries’ stock has a beta of 0.5. Assume that the risk-free rate, rRF, is 6.2% and the market risk premium, (rM– rRF), equals 7%. Which of the following statements is correct?

◦

If the risk-free rate decreases but the market risk premium remains unchanged, the required return will decrease for both stocks, but the decrease will be larger for Nile since it has a higher beta.


◦

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 but Elba’s will increase because it has a beta less than 1.0.


◦

Since Nile’s beta is three times that of Elba’s, its required rate of return will also be three times that of Elba’s.


◦

If the risk-free rate decreases while the market risk premium remains constant, then the required return on an average stock will decrease.

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
Buy Test-Bank


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by booty5 on Aug 7, 2023

athenaheim

  • Full Member
  • ***
  • Posts: 189
Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
Answer Preview
Only 60% of students answer this correctly


booty5

  • Member
  • Posts: 146
Reply 2 on: Aug 7, 2023
:D TYSM

fatboyy09

  • Member
  • Posts: 358
Reply 3 on: Yesterday
Gracias!

« previous next »
 

Did you know?

Most childhood vaccines are 90–99% effective in preventing disease. Side effects are rarely serious.

Did you know?

Allergies play a major part in the health of children. The most prevalent childhood allergies are milk, egg, soy, wheat, peanuts, tree nuts, and seafood.

Did you know?

Bacteria have flourished on the earth for over three billion years. They were the first life forms on the planet.

Did you know?

The effects of organophosphate poisoning are referred to by using the abbreviations “SLUD” or “SLUDGE,” It stands for: salivation, lacrimation, urination, defecation, GI upset, and emesis.

Did you know?

People with high total cholesterol have about two times the risk for heart disease as people with ideal levels.

Clockwise from above left: Green turtle (Chelonia mydas), Tuatara (Sphenodon punctatus), Nile Crocod Clockwise from above left: Green turtle (Chelonia mydas), Tuatara (Sphenodon punctatus), Nile Crocod
Alpha, beta, gamma amino acids Alpha, beta, gamma amino acids
The International Radura Symbol The radura symbol must appear on all irradiated foods The International Radura Symbol The radura symbol must appear on all irradiated foods
Solid Foods Should Be Introduced Gradually after Certain Milestones Are Reached Solid Foods Should Be Introduced Gradually after Certain Milestones Are Reached
ADHD (Stock photo) ADHD (Stock photo)
Beta-carotene pathway in Golden Rice 2 Beta-carotene pathway in Golden Rice 2
Video: Neuron structure and function - sensory neurons, association neurons & motor neurons

For a complete list of videos, visit our video library