If he is correct on the future price, did he make a wise investment?

Q: - explain what would you take to compare the worthness of two different fianancial investments? how…

A: Solution- Meaning of economic Investment A  Financial Investment is AN plus or instrument purchased…

Q: How is the risk-adjusted discount-rate approach more commonly practiced in the real world?

A: Risk adjusted discount rate approach is an approach which is used in assessment of various long-term…

Q: 76. You often hear about the trade-off between risk and reward. Is this trade-off part of decision…

A: Higher risk usually leads to higher profits. An investor will be able to make only a risk-free rate…

Q: When using present worth to evaluate the attractiveness of a single investment alternative, what…

A: To calculate the attractiveness of investment there is need to calculate the present worth is…

Q: Investors require a _____ return as compensation for taking ____ risk. A) higher, margin B)…

A: Risk is the possibility that the actual return on any investment made might be different from the…

Q: Can the Broader Diversification Increase Expected Return?

A: The concept of portfolio diversification is nothing but including unrelated assets in the…

Q: Does the Efficient Market Hypothesi hold true? Why or why not?

A: The efficiency of the market relates to how efficiently prices represent all available information.…

Q: Explain why the following statement is true: In general, the more uncertainty thereis about future…

A: An option which provides the holder an opportunity to delay or postpone the decision to invest until…

Q: Is the statement that a pproject that is unacceptable today might be acceptable tommorrow given a…

A: Yes , the statement is correct. Any changes related to market returns affects project of a company.…

Q: What is the expected return on a portfolio? How can the expected return on a portfolio be…

A: Expected Return on Portfolio  =( Weights of Stock 1 * Return of Stock 1) + ( Weights of Stock 2 *…

Q: Another name for the expected value of an investment would be: a. The mean value b. The risk-free…

A: The expected value (EV) is an anticipated value for investment at some point in the future. In…

Q: Suppose that the price of an asset equals its fundamental value. What behavioral features might then…

A:

Q: How would the risk premium work out for a riskier investment?

A: A risk premium is a return on venture over the hazard free rate a financial specialist requires to…

Q: What outcomes are possible with speculative risk?​

A: Speculative risk is a form of risk in which the outcome is unknown and there is a chance of both…

Q: In what circumstances would you use one of the available risk measurements used in Modern Portfolio…

A: Modern portfolio theory refers to the theory of investment that allows the investors for…

Q: Which of the following is a true statement regarding the future worth of a single investment…

A: Introduction: This question is related to the concept of time value of money. The time value of…

Q: What are the risk implications for an investor for a returns series that exhibits fat tails?

A: Fat tails means that there are more than three standard DEVIATION movements more than normal…

Q: When Decision making is affected by both personal perspective and characteristics this phenomenon…

A: Decision making is referred to as the process of making choices through an identification of the…

Q: is it possible for future prices to become negetive without violating the principle of no-arbitrage.…

A: Future prices refer to the price that two companies have agreed to pay or receive on a future day of…

Q: Suppose you know that an investment will earna positive return in the future. Why is it important to…

A: The investment may provide a positive return in the future, but the worth of receiving it in future…

Q: Which of the following statements is true for compensation of risk? a. Higher the risk, lower is the…

A: The Statement for compensation of risk is as under-

Q: IF YOU WILL INVEST IN ONE OF THE INVESTMENT OPTIONS, WHAT WOULD IT BE AND WHY? ELABORATE YOUR ANSWER

A: Out of the investment options available, the expected return of equity is higher than other…

Q: How can we make the equivalence calculations of future worth?

A: Future value is the value of the current or the present amount at future specified time for the…

Q: Do you believe on the principle-higher risk provides higher return? Can we achieve high return with…

A: Return is the reward which an investor will get by investing money in return and risk is the chance…

Q: Is the accept-or-reject decision rule the same as in the simple -investment case? Explain how?

A: Yes, accept or reject decision rule is the same as in the simple investment because accept or reject…

Q: How the risk and return trade-off can be applied in real life?

A: The risk-return tradeoff states that the return rises with an increase in risk. Investors use this…

Q: Market potential is an example of an economic risk measure. O True O False

A: Market potential refers to the expected total sales or revenue from a market, whereas an economic…

Q: Financial advisors generally recommend that their clients allocate more to higher risk–return asset…

A: M-V model represent as Mean-Variance model.

Q: Is it true that the the wider the risk premium, the lower the price of a expected future cash flow?

A: Risk premium is the return the stock gives over the risk free asset. risk premium = Rs-Rf Wider risk…

Q: did hedging reduce volatility of the realized price?Answer Yes or No and explain

A: Hedging can be referred as a strategy that is used by the investors to reduce the risk associated…

Q: In general, what effect would a reduction in risk have on “going-in” cap rates? What would this…

A: Capitalization rate is the projected rate of return percentage that a property will make on the…

Q: What impact does each of the followingparameters have on the value of a call option?(4) Risk-free…

A: An agreement where the holder has a right to purchase or sell the shares at a specific price at a…

Q: Do you think investors should practice dollar cost averaging when investing their money? Why or why…

A: Dollar-Cost Averaging: Dollar-Cost averaging is an investment approach that involves investing an…

Q: Which of the following statements describing the elements of intrinsic valuation is most accurate?…

A: Intrinsic value of any project or any assets is how value being added by asset to value of investors…

Q: Consider the following statement: “In contexts of increased uncertainty, the usefulness of real…

A: A real option allows a company's executives the option, but not the responsibility, to pursue…

Q: 1) Let us start with what is the difference between a real and a financial asset? 2) What is the…

A: Real assets and financial assets are two distinct types of assets owned by businesses and…