We expect a return on the market of 11.400% and a risk-free rate of 1.400%. We expect that in this market Discovery Cafe will generate a return of 5.900%. Thus we can calculate that Discovery Cafe has a beta of and the risk premium in this market is %.

We expect a return on the market of 11.400% and a risk-free rate of 1.400%. We expect that in this market Discovery Cafe will generate a return of 5.900%. Thus we can calculate that Discovery Cafe has a beta of and the risk premium in this market is %.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter3: Risk And Return: Part Ii

Section: Chapter Questions

Problem 2Q: Security A has an expected rate of return of 6%, a standard deviation of returns of 30%, a...

See similar textbooks

Related questions

Q: Solve this question Accounting

A: Step 1: Determine the number of shares issued.Step 2: Identify the fair value of the stock at the…

Q: Do fast and step by step calculation for this accounting question not use ai

A: Step 1: Define Labor CostDirect labor refers to the direct production cost, which forms part of both…

Q: Solve This Accounting Question with option Please need help with

A: Step 1: Define Total Asset turnoverTotal asset turnover is given as the sales divided by the total…

Q: Accounting meiston press has a debt equity ratio of 1.10 ..calculate

A: Step 1: Given Value for Calculation Debt Equity Ratio = de = 1.10Pre Tax Cost of Debt = cd =…

Q: Pioneer and victory operate in the same industry. Please solve these accounting question not use…

A: Step 1: Define Cost-Volume-Profit AnalysisThe concept of the cost-volume-profit analysis is useful…

Q: Please give me answer accounting

A: Straight-line depreciation method:Step 1: Determine the depreciable cost.Depreciable cost = Cost of…

Q: If you were a manager of United Airlines, and the airlines is in need of an airplane, would you…

A: In order to maintain its cash flow while simultaneously obtaining the aircraft for long-term use,…

Q: Under the NBA deferred compensation plan, payments made at the end of each year accumulate up to…

A: To calculate the accumulated amount in Hardaway's deferred compensation account, we need to use the…

Q: Need experts solution only.

A: Approach to solving the question: Analysis Detailed explanation:For Journal Entry for Cost of…

Q: Can u help me on this Question

A: Definitions Related to the QuestionSubstance Over Form:This accounting principle emphasizes that the…

Q: Emily Consultants Company has a fiscal year ending December 31. For each of the following…

A: For accrued wages, unrecorded and unpaid at year-end, we debit Wage Expense and credit Wages…

Q: Need help with this accounting question do fast

A: Step 1: Define Debt to Equity RatioDebt to equity ratio can be defined as the financial ratio that…

Q: I need help correcting the payroll for the October period from October 17 to October 20, which…

A: Step 1:Let me help you analyze and correct the payroll for the October period. I'll break this down…

Q: Provide Answer of this one please need Correct Answer general accounting

A: we need to calculate the beta of Discovery Cafe and the risk premium in the market.1. Formula for…

Q: Need answer the accounting question not use ai

A: Computation of adjusted cash balance as per books on January 31 by using the following method:Bank…

Q: The attached picture is Lannister salon's financial position for year 2023. Pls. Create a vertical…

A: Liquidity refers to the ability of a company to meet its short-term obligations. The higher the…

Q: What%

A: Explanation of Profit Margin:Profit margin is a measure of a company's profitability and is…

Q: Please financial accounting expert tutor solve the problem

A: Explanation of Cost of Equity:The cost of equity represents the return that investors expect for…

Q: Get correct answer accounting

A: Step 1: Define Net IncomeNet income is the firm's after-tax earnings, which will be available for…

Q: Compute the following ratios on these accounting question

A: Step 1: Define Receivables TurnoverThe receivables turnover ratio is one of the activity ratios. It…

Q: What is the company's required return on these financial accounting question?

A: Understanding the Capital Asset Pricing Model (CAPM)The CAPM is that version of the model that…

Q: General accounting Need help

A: Step 1:- Define High-Low MethodThe high-low method determines the variable cost per unit (which…

Q: Need General Accounting Questions Solution provide the Correct answer what is final Answer

A: Step 1: Define Bank Reconciliation StatementA bank reconciliation consists of two parts; in the…

Q: GP ℅ FOR THIS PERIOD?

A: Explanation of Net Sales Revenue: Net sales revenue represents the total amount of money generated…

Q: Get correct answer general accounting

A: Step 1: Define Bank ReconciliationAccount transactions can be verified with accounting invoice…

Q: Question I (80%) TechNova Inc. (TN) is the leading manufacturer of smart home hubs, while MicroTech…

A: Part (b) - Adjusting Entries and Consolidation Journal EntriesTo complete the consolidation process,…

Q: . Further information on the activities of the Juice industry in 2023 is providedin table 2.1 below…

A: Hope this helps.

Q: Use the following link to answer in the question below…

A: Step 1: Step 2: Step 3: Step 4:

Q: Provide this question general accounting solutions

A: Step 1: Define Price-Earnings RatioThe price-earnings ratio is a measure of how many times the…

Q: 1. Should Caricarn accept this special order? Explain and provide work where possible 2. As in 1,…

A: Question 1: Should Caricarn Accept the Special Order?To determine if Caricarn should accept the…

Q: A. True or B. False

A: Step 1:Determine the total discountStep 2:Determine the number of periodsStep 3:Calculate the…

Q: Can you answer this accounting question?

A: Step 1: Define Price-Earnings RatioThe price-earnings ratio (or multiple) approach can be used to…

Q: I need answer of this question general accounting

A: Step 1: Define Net IncomeThe net income of an individual or a firm is computed by deducting all the…

Q: I need answer of this question accounting

A: Step 1: Define Finished GoodsThe total amount of finished goods in the inventory is calculated as…

Q: Provide correct answer the financial accounting question

A: Step 1: Define Asset PricingAsset pricing is a process that is used to determine the intrinsic value…

Q: Accounting Darter corporation uses the weighted overage the following information is available for…

A: Step 1:Computation of the units completed during January: Units completed during January = Units on…

Q: Give me Answer of this Question.. need correct option

A: Step 1: Detailed Definition of Gain or Loss on Disposal of an AssetThe gain or loss on disposal of…

Q: Answer

A: c. The benefit foregone from the next best alternativeOpportunity cost is the value of the foregone…

Q: How much____?

A: Explanation of Material Price Variance: Material price variance measures the difference between the…

Q: Need General Accounting Question solution with Explanation of Calculation

A: Step 1: Calculate the Contribution Margin per UnitContribution Margin per Unit: This is the amount…

Q: The attached pic is Lannister Salon's Comprehensive Income from 2022-2023. Here are the following…

A: Upon reviewing the computations and classification of accounts, it appears that they have been…

Q: Get correct answer general accounting

A: Step 1: Define Net IncomeNet income is the excess of revenues over the expenditures and is a very…

Q: Please give me answer accounting

A: Step 1: Define DepreciationThe costs incurred on procurement of long-term assets are not charged to…

Q: General accounting 20 marks Assignment

A: Step 1: 1) Marginal income per unit: Marginal income per unit can be calculated by subtracting the…

Q: Provide correct answer the accounting question please do fast

A: Step 1: Define Overhead ApplicationIn the domain of accounting, indirect costs are the overhead…

Q: General Accounting

A: Step 1: Define Direct Labor Time VarianceThe direct labor time (of efficiency) variance represents…

Q: Please provide this question answer general accounting

A: The Cash, Accounts Receivables, and Inventories are current assets. Thus, the following…

Q: Amy is evaluating the cash flow consequences of organizing her business entity SHO as an LLC (taxed…

A: Step 1:To evaluate the cash flow consequences for each entity type, we will calculate the after-tax…

Q: 8

A: Explanation of Gross Sales: Gross sales represents the total amount of all sales transactions for a…

Q: Provide solution please

A: Explanation of Degree of Operating Leverage (DOL): Degree of Operating Leverage measures how a…

Question

I need answer of this question general accounting

We expect a return on the market of 11.400% and a risk-free rate
of 1.400%. We expect that in this market Discovery Cafe will
generate a return of 5.900%.
Thus we can calculate that Discovery Cafe has a beta of
and the risk premium in this market is
%.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Please give me answer general accounting
Can you please solve these accounting question?
please help with this question
If the expected rate of return on AZNG is 12.72, its beta is 1.09 and the market risk premium is 8%, what is the risk-free rate?
The CRT Co. has a beta of 1.6 The expected market return is 9.5 percent and the risk free rate of return is 3.2 percent. What is the required rate of return for the CRT Co.?
Suppose the beta of PetrolCom is 0.75, the risk - free rate is 3 percent, and the market risk premium is II percent. Calculate the expected rate of return on PertrolCom.
The risk-free rate and the expected market rate of return and 0.056 and 0.125. Using the CAPM model, the expected rate of return of a security, that you are interested in, has a beta of 1.25 would be equal to Calculate the expected rate of return
If X-Co has a Beta of 1.6, and the risk-free rate is 4.5%, and the average market risk premium is 6%, what is X-Co’s estimated required return per the CAPM? (show calculations)
What is the required return on an investment with a beta of 1.3 if the riskfreerate is 2.0 percent and the return on the market is 8.1 percent? If the expected return on the investment is 11.2 percent, what should you do?
Security A has an expected return of 7%, a standard deviation of returns of 35%, a correlation coefficient with the market of 0.3, and a beta coefficient of 1.5 Security B has an expected return of 12%, a standard deviation of returns of 10%, a correlation with the market of 0.7, and a beta coefficient of 1.0 Which security is riskier? Why?
The risk-free rate and the expected market rate are 6% and 12%, resp. According to the CAPM, the expected rate of return on security X with a beta of 1.2 is equal to .%
An analyst has modeled the stock of Crisp Trucking using a two-factor APT model. The risk-free rate is 6%, the expected return on the first factor (r1) is 12%, and the expected return on the second factor (r2) is 8%. If bi1 = 0.7 and bi2 = 0.9, what is Crisp’s required return?