For the following equation: S=P(1+r)n where P=3,000 S=11,000 and n=5, the value of r is (expressed as a percentage rounded to the nearest two decimal places; don’t show the % sign eg 0.05623 is 5.623% but would be expressed as 5.62): Answer:
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.
1. For the following equation: S=P(1+r)n where P=3,000 S=11,000 and n=5, the value of r is (expressed as a percentage rounded to the nearest two decimal places; don’t show the % sign eg 0.05623 is 5.623% but would be expressed as 5.62):
Answer:
2.You invested $6,000 in a savings deposit 8 quarters ago and it has grown to $6886 today. What nominal rate of annual interest (compounding quarterly) did you earn? (expressed as a percentage to two decimal places; don’t use the % sign)
Answer:
3.If I invest $23,000 today at 14.6% p.a. compounding quarterly, how long will it take for the investment to reach $150,000. Answer in quarters to two decimal places.
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