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.
How to Use
Compound interest factor for annuities is used to compute the present and future value of annuities, where,
PVIFA (present value interest factor of an annuity) is used to compute the present value of an ordinary annuity.
The present value of annuities is computed by multiplying the PVIFA (present value interest factor of an annuity) by Annuity.
FVIFA (future value interest factor of an annuity) is used to compute the future value of an ordinary annuity.
The future value of annuities is computed by multiplying the FVIFA (future value interest factor of an annuity) by Annuity.
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