Dr. Dan is considering investment in a project with beta coefficient of 1.75. What would you recommend him to do if this investment has an 11.5 percent rate of return, risk-free rate is 5.5 percent, and the rate of return on the market portfolio of assets is 8.5 percent?

Q: What is optimal capital budget?

A: Budget: The estimation of the income and expenditure of the particular future period and is…

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: Write the various applications that call for annual-worth analysis techniques?

A: Annual worth analysis is the analysis which is done by the managers before taking capital budgeting…

Q: What is the expected return on a two asset portfolio and what are its variance and standard…

A: Two Asset portfolio: The portfolio that has 2 assets is called as two asset portfolio.

Q: What happens if the payback period is within the acceptable range?

A: The payback period alludes to what extent it takes for a speculator to hit breakeven to recoup the…

Q: inflation method of finding pv?

A: Solution:- When some amount of money is invested in real estate, the price of real estate either…

Q: Define the term Risk-free real return?

A: Risk-free real return is a hypothetical number that mirrors the foreseen return on a venture that…

Q: Wildhorse Inc. is considering modernizing its production facility by investing in new equipment and…

A: The profit made over an investment made by the investors is referred to as the rate of return. It is…

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: Explain retention growth equation

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

Q: How Broader Diversification Increases Expected Return?

A: The expected return on an investment refers to the weighted average of estimated returns and…

Q: What is future value, FV?

A: Future Value: The future value is the value of the present amount compounded at an interest rate…

Q: beta value on risk-return ratio

A: The risk-return ratio measures the return in terms of risk for a specified period of time. The…

Q: What security provides a good estimate of the long-term nominalrisk-free rate?

A: Risk-free Rate is the estimation of the rate that is earned on the securities or the investments…

Q: Basic Elements of Risk-Adjusted Returns?

A: Introduction: Risk adjusted return is a methodology for calculating and evaluating the returns on an…

Q: Explain prime rate

A: Introduction: Usually an interest rate is the amount that a lender pays calculated as a percentage…

Q: How is it possible to achieve a higher rate of return without significantlyincreasing risk?

A: As we all learnes till now that higher the risk provides higher return and if we want the high…

Q: compare Future Value and Present Value?

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

Q: Consider IRR on Incremental Investment when Initial IRR Flows are equal?

A: Answer: IRR is a measure in capital budgeting used to measure the value of the predicted…

Q: Explain real rate of return

A: This is the raw rate of return adjusted with inflation. It is used to ascertain the effective return…

Q: Explain expected rate of return

A: Return: Return is defined as the money attained or lost on an investment through certain time…

Q: what is the return on investment in percent?

A: Solution:- Rate of return on investment means the percentage of return on the money invested. So,…

Q: Which type of average rate of return best describes the average annual rate of return earned over…

A: A mutual fund's average yearly return is a percentage that indicates the fund's historical average…