Answer: The new stock price of DL Inc. would be $37.50 if the covariance of its rate of return with the market portfolio halves on a permanent basis but everything else remains the same.
If the covariance of the security's rate of return with the market portfolio halves on a permanent basis but everything else remains the same, the security's new beta would be half its initial beta. The beta of a security is the covariance of the security's rate of return with the market portfolio divided by the variance of the market portfolio.The CAPM formula is used to compute the expected rate of return on a security, and it is as follows: Required return = risk-free rate of return + (beta x market risk premium).
The current price of DL Inc. stock can be calculated using the CAPM formula as follows: Beta = covariance of DL Inc. with the market portfolio/variance of the market portfolio= ?/ (8 x 8) = ?/64 where beta is unknown.Covariance of DL Inc. with the market portfolio = 0.5, Covariance of DL Inc. with the market portfolio = 0.5 x Var (DL Inc.)/Var (Market) = 0.5 Covariance of DL Inc. with the market portfolio is half the original covariance.
The beta for the security = 0.5 Covariance of DL Inc. with the market portfolio = 0.5 x ?Var (DL Inc.)/Var (Market) = 0.5 (0.5 x ?Var (DL Inc.)/Var (Market)) = ?Var (DL Inc.)/ (2 x Var (Market))Required rate of return = 4% + (0.5 x 8%) = 8%.DL Inc.'s current stock price = Dividend per share/ (required rate of return - growth rate) = $3/ (8% - 0%) = $37.50.
Therefore, the new stock price of DL Inc. would be $37.50 if the covariance of its rate of return with the market portfolio halves on a permanent basis but everything else remains the same.
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A sales tax is a type of "indirect tax".
Indirect taxes are fundamentally imposes that can be passed on to another substance or person. It is generally forced on a maker or provider who at that point passes on the duty to the customer.
Sales tax refers to the utilization charge required on products and ventures obtained at the retail level, paid by the customer and put together by the retailer to the overseeing charge authority. Whenever individuals go to the shopping centers or retail chains to shop, they are now going to make good on roundabout regulatory expenses. Goods , for example, family unit things, garments, and other essential wares are liable to such sort of taxes.
B. low interest rates on creditors over a long period
C. federal reserve discount rate reductions on the bond markets
D. a required reserve ratio on excess reserves
I need help on this, Unit 6 Lesson 10, please. CCA
Answer: a cash deposit into banking system on the money supply
The money multiplier refers to the ratio of deposits to the reserves in a certain banking system. The money multiplier formula is caused by a cash deposit in a bank on the money supply.
Answer:
Thiru Sandeep Saxena, IAS, Additional Chief Secretary to Government, Environment and Forests Department, Government of Tamil Nadu.
b. False