3a. You are paying an effective annual rate of 18.974 percent on your credit card. The interest is compounded monthly. What is the annual percentage rate on this account? 3b. What is the effective annual rate if a bank charges you 9.50 percent annually but compounded quarterly?
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.
3a. You are paying an effective annual rate of 18.974 percent on your credit card. The
interest is compounded monthly. What is the annual percentage rate on this account?
3b. What is the effective annual rate if a bank charges you 9.50 percent annually but
compounded quarterly?
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