Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Concept explainers
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.
Question
need both answer.
Transcribed Image Text:account:
Date
January 1
July 1
December 31
You are given the following information about an investment
Y =
Value Immediately Before Deposit Deposit
49
56
X
Over the year, the time-weighted return is 0%, and the dollar-weighted return is Y.
Calculate Y.
%
X
Transcribed Image Text:An investor deposits 50 in an investment account on January
1. The following summarizes the activity in the account during the year:
Date Value Immediately Before Deposit Deposit
March 15
20
June 1
80
October 1
75
X = $
40
80
175
On June 30 the value of the account is $183.52. On December 31 the value of the
account is X. Using the time-weighted method, the equivalent annual yield during the
first 6 months is equal to the the time-weighted yield during the entire 1-year period.
Calculate X.
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