provide an example how can government tax cuts change a beta of a company. (beta=1.5)
provide an example how can government tax cuts change a beta of a company. (beta=1.5)
Homework Answers
A beta is the volatility of the company's stock in relation to the market conditions. A company with higher cost of debt has a higher beta since the risk is more. A reduction in tax rates will reduce the tax deduction available out of interest costs and hence increasing the cost of debt. This will increase the levered beta of a firm.
If the beta is 1.5, a tax cut will increase the beta to a value greater than 1.5
Add Answer to:
provide an example how can government tax cuts change a beta of a company. (beta=1.5)
1). On the other hand, tax cuts have a lower multiplier effect than increases in government...
1). On the other hand, tax cuts have a lower multiplier effect than increases in government spending. This means that we get more economic stimulus from a given dollar value of government spending than the same dollar value in tax cuts. The tradeoff here is between more efficiency (with tax cuts) vs. more economic stimulus (with government spending). Differences of opinion on this matter are cause for heated political debate and overblown political rhetoric. So what do you think? Do you...
An economist who favors larger government would recommend Multiple Choice tax cuts during recession and reductions...
An economist who favors larger government would recommend Multiple Choice tax cuts during recession and reductions in government spending during inflation. increases in government spending during recession and tax increases during inflation. O tax increases during recession and tax cuts during inflation. tax cuts during recession and tax increases during inflation.
A tariff is a tax on imported goods. Suppose the U.S. government cuts the tariff on...
A tariff is a tax on imported goods. Suppose the U.S. government cuts the tariff on imported flat screen televisions. Using the four-step analysis found on pages 61-62 of Chapter 3, how do you think the tariff reduction will affect the equilibrium price and quantity of flatscreen TVs?
As you know, the government, through various tax cuts and spending programs, sometimes tries to influence...
As you know, the government, through various tax cuts and spending programs, sometimes tries to influence the state of the economy. What measures does the government have at its disposal and how do you think these actions would influence existing expansionary and recessionary gaps? Do you think these efforts are effective in the long term?
Company A has a beta of 1.5. Company B has a beta of 0.90. The required...
Company A has a beta of 1.5. Company B has a beta of 0.90. The required rate of return on the stock market is 10.5%. The risk-free rate is 5%. How much greater is Company A's required rate of return compared to Company B's?
how can you change the type of tax return selected for a company in the prep...
how can you change the type of tax return selected for a company in the prep for taxes tool in QuickBooks
Under the 2017 Tax Cuts and Jobs Act, the most significant change is that the corporate...
Under the 2017 Tax Cuts and Jobs Act, the most significant change is that the corporate tax rate goes from 35 percent to 21 percent, which puts U.S. Companies on competitive footing with many other countries. True or False
Explain how an equal or balanced change in government spending and tax revenues may cause income...
Explain how an equal or balanced change in government spending and tax revenues may cause income to rise
How can a gymnast change their angular velocity while conserving their angular momentum (H)? Provide an...
How can a gymnast change their angular velocity while conserving their angular momentum (H)? Provide an example of how this can be done.
Provide an example of a specific public good that is provided by State or Local government,...
Provide an example of a specific public good that is provided by State or Local government, determine an externality that could impact it’s provision, and identify one way the government can respond.
An economist who favors larger government would recommend Multiple Choice tax cuts during recession and reductions in government spending during inflation. increases in government spending during recession and tax increases during inflation. O tax increases during recession and tax cuts during inflation. tax cuts during recession and tax increases during inflation.
Most questions answered within 3 hours.
-
At a certain temperature, the equilibrium constant, Kc, for this
reaction is 53.3.
H2(g)+I2(g)−⇀↽−2HI(g)Kc=53.3
At this...
asked 1 hour ago -
Question1 ) The STL provides similiar classes called stack and
queue, both of which gave functions...
asked 2 hours ago -
For Questions 1-4, assume you have 5 bits available:
1. For (positive) integers: What is the...
asked 2 hours ago -
convert grams into vloume with the density of water being at
.997514 g/cm^3 at 23.1 Celsuis...
asked 4 hours ago -
Foreman company obtained a $20,000, 6% loan on May 1, 2018.
Principal and interest will be...
asked 4 hours ago -
5. Problem 11.05 (Discounted Payback)
eBook
Project L costs $60,000, its expected cash inflows are $14,000
per...
asked 4 hours ago -
1. Which of the following is true about politics and health
organizations?
A. Health organizations are...
asked 5 hours ago -
A space vehicle is coasting at a constant velocity of 18.1 m/s
in the +y direction...
asked 6 hours ago -
5) Use the following balanced equation to answer questions
(a)-(i).
3 Cu(s) + 8 HNO3(aq) →...
asked 5 hours ago -
A three-year maturity bond with a 12% annual coupon rate is
currently traded at par $1000...
asked 6 hours ago -
1.
What is the minimum volume to use in the Spec 20 cuvette in order
to...
asked 6 hours ago -
A builder wants to install wall-to-wall carpeting in a living
room of length 8.87 m and...
asked 6 hours ago