Managerial Finance: Calculating the expected rate of return.

Shady Dealings Co. has a beta of 0.7 and a required rate of return of 15%. The market risk premium is currently 5%. If we expect the inflation premium to increase by 2% and Shady Dealings to acquire assets which will increase its beta to 1.05, what will be Shady Dealings' new required rate of return? a) 13.5% b) 22.8% c) 18.75% d) 15.25% e) 17.0%

EFFICIENCY AND INCIDENCE

Not quite sure how to do this problem. Suppose the NJ government decides to impose a $1,000 per student tax on colleges--each college has to pay $1,000 for each student enrolled. The supply curve of college education (before tax) is Qs = 40P, and the demand curve is Qd = 400,000 - 10P. a. Find the pre-tax equilibrium price and quantity. b. Find the equilibrium price after the tax is imposed. What are the quantity, price paid by consumers, and price recieved by sellers? c. Find the government tax revenue and approximate the excess burden caused by the tax. Why is your measure of excess burden an approximation (what information are you missing)? d. What would have happened (how... click for more

Labor Economics: Explain how the effects of a requirement that firms provide additional safety equipment to each worker in an industry depends on the substituability of capital for labor and the extent to which workers in the industry can find jobs elsewhere.

Explain how the effects of a requirement that firms provide additional safety equipment to each worker in an industry depends on the substituability of capital for labor and the extent to which workers in the industry can find jobs elsewhere.

WELFARE ECONOMICS

In a hypothetial society, the government has decided to right the historic wrongs done to vertically challenged (ie short) people. Part of the program involves subsidizing the purchase of stilts by short people. Specifically, each pair of stilts purchased by a short person recieves a subsidy of S percent. To finance this subsidy, each pair of stilts purchased by someone who is tall is taxed at a rate of T percent. Assume that i) the relevant supply curve are perfectly horizontal so that the price to short people falls by exactly S percent and the price to tall people rises by exactly T percent; ii) there are no other taxes, subsidies, or market imperfections in the economy; and iii)... click for more

Excess Burden

In Risainia (a hypothetical country), the prices of commodities such as food and clothing are set in a free market, but housing is heavily subsidized by local governments. A two-bedroom apartment, for example, might rent for $10.50 per month. (Utilities and other fees increase the cost to about $350.) Consider the following statement made by an economic advisor: "Because of subsidized rents, some tenants live in larger apartments than they need and might not otherwise afford." Explain how this situation relates to the concept of excess burden, and illustrate with a diagram. (Answer could be about a paragraph or so and diagram) Does anyone have any idea what this question is asking or ... click for more