- Calculate the average rate of return for each stock during the period 2x15 through 2x19. Assume tha someone held a portfolio consisting of 50% of Stock A and 50% of Stock B. What would have been the realized rate of return on the portfolio in each year from 2x15 through 2x19? What would have been the average return on the portfolio during that period? . Calculate the standard deviation of returns for each stock. Assume the risk-free rate during this time was 3.5%. What are the Sharpe ratios for Stocks A and B ove this time period using their average returns?

Q: Define constant yield method

A: It is the method of ascertaining the collected discount of securities that trade the secondary…

Q: Contribution margin means

A: In the production there are many types of cost some cost change with volume but some do not change…

Q: Explain the term Annual Effective Yields?

A: Annual effective yield: Annual effective yield is defined as the simple rate of interest that gives…

Q: What is the formula to find an expected in returns in CAPM

A: In this question, we are required to determine the formula for expected return in Capital Asset…

Q: Define total net present value (TNPV)

A: Total net present value of an investment is the present value of the future cash inflows due to a…

Q: Create a chart reflecting the conventional payback period?

A: The question is based on the calculation of payback period.

Q: Can you teach me all of this on how to solve a problem in each topic?…

A: "Since you have posted a question with multiple subparts, we will solve the first three subparts for…

Q: What is the marginal rate of return? How is it calculated?

A: Answer: Marginal rate of return can be defined as the return obtained or received by means of…

Q: Why are the net present value and the internal rate of return models superior to the payback period…

A: The net present value and internal rate of return techniques are superior to the payback method…

Q: List and compare all advantages and disadvantages of Payback Period Rule, Average Accounting Return,…

A: Payback rule: The Payback period is the length of time required to recover the initial cost of a…

Q: Explain retention growth equation

A: The retention growth equation demonstrates the ways through which the growth is associated to…

Q: Explain payback period

A: Answer: Payback period is nothing but the time a company gets back the money that is originally…

Q: Explain Computing Holding Period Returns?

A: Introduction: Holding period returns (HPRs): Holding period return (HPR) is one of the investment…

Q: Discuss cost-benefit analysis and financial analysis tools

A: Answer: Cost-benefit analysis: It is nothing but a process of decision making that balances the…

Q: Define the term current market value.

A: The current market value (CMV) gives parties interested in making a transaction the approximate…

Q: Comparison of NPV, IRR or Payback period

A: The net present value (NPV) is the difference between the present value of cash inflows and…

Q: Explain price improvement

A: It is a process where the purchasing customer gets the opportunity to buy shares at a lower cost…

Q: How is the payback period determined?

A:

Q: Identify and differentiate or define the types of

A: There are mainly two types of payback analysis : 1. Payback period 2. Discounted payback period

Q: What is opportunity cost rate?

A: The opportunity cost is the cost of the option or alternative missed due to the acceptance of the…

Q: Payback Period Modified Payback Period Net Present Value Profitability Index Accounting Rate of…

A: Here, we have to find these financial topics.

Q: Define reinvestment rate risk

A: Reinvestment means investing without withdrawing the benefits (or) interest from the fund so that it…

Q: Explain Cumulative Investment Return Patterns?

A: Answer: Introduction: Cumulative return is the total amount of money that an individual has…

Q: What is meant by partitioning the internal rate of return? Why is this procedure meaningful?

A: Internal rate of return is defined as the annual rate of earnings on an investment and unlike income…

Q: Payback period in investment: Objectives, Advantages and Disadvantages

A: The payback period is a method of evaluating investment projects that measures the length of time it…

Q: Define efficiency ratios

A: Efficiency Ratios : These ratios are employed to evaluate the efficiency with which the firm manages…

Q: compare Future Value and Present Value?

A: The comparison between present value and future value is as follows:

Q: How can we calculate the Rate-of-Return with Excel?

A: The question is based on the concept of calculation of rate of return (ROR), (ROR) is percentage…

Q: Describe IRR on Incremental Investmentment When InitialFlows are equal?

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: what is payback period

A: Capital Budgeting: It is the planning process used to determine whether an organization invests in a…

Q: Explain profitability index

A: Profitability index is a financial tool which tells us whether an investment should be accepted or…

Q: Define target payout ratio

A: SOLUTION:- A target payout ratio is a degree of the proportion of a company's profits it would want…

Q: Which are the several ways of defining the concept of rate of return on investment?

A: Answer: Return on investments is an instrument which can be used to calculate the company’s…

Q: What are the different terms used to refer to the rate of return?

A: Rate of return is an expected profit on an investment by a investor. It is a rate at which investor…

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.