If a company's beta increased from 1.5 to 4.5, would its expected rate of return triple? Explain

Question:

If a company's beta increased from 1.5 to 4.5, would its expected rate of return triple? Explain why or why not.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Financial Management Principles and Applications

ISBN: 978-0134417219

13th edition

Authors: Sheridan Titman, Arthur J. Keown, John H. Martin

See More Books

Question Posted: Apr 24, 2017 10:28 AM

See More Questions

If a company's control risk is low, the auditor needs to gather evidence on the operating effectiveness of the controls. Required a. For each of the following control activities, indicate the audit...
If a company's control risk is assessed as low, the auditor needs to gather evidence on the operating effectiveness of the controls. For each of the following control activities listed as (1) - (10)...
If a company's days sales in inventory ratio decreases from one year to the next, would this be viewed as a sign that the company's inventory management has improved or deteriorated? Explain.
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 2009, the following tentative trial balance as of December 31, 2008, is prepared...
How can the average value of an alternating current be zero, yet the square root of the average squared value not be zero?
Complete the following table and answer the questions below: a. At which rate is total utility increasing: a constant rate, a decreasing rate, or an increasing rate? How do you know? b. A rational...
Alternate Coding Schemes for the Regression Approach to Analysis of Variance. Consider Eq. (8.18), which represents the regression model corresponding to an analysis of variance with three treatments...
An insurance company has high levels of absenteeism among the office staff. The head of office administration argues that employees are misusing the companys sick leave benefits. However, some of the...
A car company is experiencing a severe parts shortage due to an industrial steel production backlog worldwide. Will it affect the beta of the stock? Explain why or why not.
Reship Solutions, Inc. has a distribution center in Cincinnati where it receives and breaks down bulk orders from suppliers factories and ships out products to retail customers. The different quality...
If the standard deviation of Company A's stock returns is greater than the standard deviation of Company B's stock returns, then the beta of Stock A must be greater than the beta of Stock B. Explain...
What did Depression-era humorist Will Rogers mean when he said, "People tell me about the great return I'm going to get on my investment, but I'm more concerned about the return of my investment"?
What are the three stages of a contractual relationship? Describe the legal situation of a minor in each of these stages.
For financial assets classified as held to maturity, how are unrealized gains and losses reflected in shareholders equity? A. They are not recognized. B. They flow through retained earnings. C. They...
Which of the following statements about cash received prior to the recognition of revenue in the financial statements is most accurate? The cash is recorded as: A. deferred revenue, an asset. B....
Which of the following is an off -balance-sheet financing technique? The use of A. capital leases B. operating leases. C. the last in, first out inventory method.
According to the Conceptual Framework for Financial Reporting (2010) , which of the following is not an enhancing qualitative characteristic of information in financial statements? A. Accuracy. B....
During 2009, Argo Company sold 10 acres of prime commercial zoned land to a builder for $5,000,000. The builder gave Argo a $1,000,000 down payment and will pay the remaining balance of $4,000,000 to...
Ask your instructor for the class mean and class standard deviation for one of the exams taken by your class. For that exam, calculate the z-score for your exam grade. How many standard deviations is...
(a) Prove that form an orthonormal basis for R3 for the usual dot product. (b) Find the coordinates of v = (1, 1, 1)T relative to this basis. (c) Verify formula (5.5) in this particular case. 48-65...
Garmen Technologies Inc. operates a small chain of specialty retail stores throughout the U.S. Southwest. The company markets technology-based consumer products both in its stores and over the...
Morten Food Products, Inc. is a regional manufacturer of salty food snacks. The firm competes directly with the national brands including Frito-Lay, but only in the U.S. Southeast. Last year Morten...
Landcruisers plus (LP) has operated an online retail store selling off-road truck parts. As the name implies, the firm specializes in parts for the venerable Toyota FJ40 that is known throughout the...
Lake Incorporated and the River, Incorporated reported net incomes of $205,000 and $164,000, respectively, for the most recent fiscal year. Both companies had 41,000 shares of common stock issued and...
What effect Eventually, BREXIT will make on EU? How it will benefit UK? What will be the possible outcome?
Merchant Company purchased property for a building site. The costs associated with the property were: Purchase price Real estate commissions Legal fees Expenses of clearing the land Expenses to...

If a company's beta increased from 1.5 to 4.5, would its expected rate of return triple? Explain

Question:

Step by Step Answer:

No a ssuming the r isk f r e e ra te is 4 a nd the m ar k e t ...View the full answer

Financial Management Principles and Applications

Students also viewed these Finance questions