2. What is the principal invested at 4.75% compounded semiannually from which monthly withdrawals of $240 can be made at the beginning of each month for 15 years? _________________
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Answer question 2 only. If need be you can used data from question a
1. Amy made semiannual deposits of $3,100 at the beginning of every every six months into a fund earning 6.8% compounded semiannually for nine years. No further deposits were made.
a. How much will be in the account 15 years after the first deposit? _____________
b. How much in total was deposited? ______________
c. How much interest will Amy earn? _____________
2. What is the principal invested at 4.75% compounded semiannually from which monthly withdrawals of $240 can be made at the beginning of each month for 15 years? _________________
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