payback period?

Q: What is capital rationing?

A:

Q: What is alternative cash flow measures?

A: Cash flow refers to the amount of cash that moves in and out of the business because of its…

Q: What is market interest rate?

A: The interest rate in which borrowers and lenders borrow and lend money to each other is called…

Q: relationship between Future Value Factor and Future Value of an Annuity Factor

A: Future value factor is the equivalent value at the some future date of a cash flow at time 0. For…

Q: How is the revaluation surplus handled under the revaluation model?

A: The question is related to Revaluation model under IAS16 Property, Plant and Equipment. Under this…

Q: How can we find Yield to maturity?

A: Yield to maturity (YTM) is the foreseen absolute profit for a bond if the bond holds until due or…

Q: What is meant by the concept of “potential savings (profits)”?

A: Profit is the total revenues less all costs and expenses. In other words, profit is the net earnings…

Q: Explain The Need for an External Interest Rate?

A: There is a strong need for the external interest rate because it helps in making financial…

Q: What is meant by Short-term financing?

A: Finance refers to the study of money , currency as well as the capital assets.There are basically…

Q: Explain the sequential payout tranche structure?

A: Sequential payout tranche structure In this type of structure interest payments are received by…

Q: Explain payback period

A: Answer: Payback period is nothing but the time a company gets back the money that is originally…

Q: What is negative inflation premium

A: Negative inflation premium, also known as deflationary premium, refers to a situation where the…

Q: Explain Interest Rates and Inflation Expectation?

A: An interest rate is the measure of cash a bank or creditor charges for right of entry to cash. The…

Q: Which are the two computational schemes for calculating this earned interest yield?

A: The two computational schemes for calculating the earned interest yield are compound interest scheme…

Q: What is growth rate?

A: A growth rate is the percentage increase in the cash flows of the company. A growth can be measured…

Q: How does risk affect interest rates?

A: The risk and the interest rates are in a direct relationship that is, the greater the risk the…

Q: What is the concept of present value? What is discounting?

A: Present value means value of future cash flows in todays terms.

Q: What is the discounted-payback method?

A: Payback period states the number of years that is taken by the project to recover the investment of…

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

A: T-bills are the treasury bills issued by the government. These bills are risk-free and the rate of…

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: Using examples, differentiate between short term and long term finance?

A: Financing: It represents a process where the business is funded for its activities or buying…

Q: What is the concept of present value? How does it affect inflation

A: Increase in general price levels in an economy is known as inflation. Due to inflation, the cost of…

Q: What is FX rate?

A: The exchange rate is that rate in which price of the country currency is measured in the term of the…

Q: When is a project in Need for an External Interest Rate?

A: When net cash flow that is generated by the project during the project’s life is reinvested, then…

Q: impacts  of inflation on money investment

A: Inflation occurs when prices across a sector or an industry increases, thereby decreasing the…

Q: What is duration gap model? Explain the concept of duration. How duration measure can be used to…

A: Duration gap measures the mismatch between the duration of assets and liabilities held by a…

Q: The terms of a loan call for monthly payments for 6 years at 9.6 percent interest. If you borrow…

A: The present Value of Ordinary Annuity refers to the concept which dictates today's value of a sum of…

Q: Where does the discount rate from present value came from? How to solve it?

A: In finance, a reduction rate is that the rate of come wont to discount future money flows back to…

Q: INTEREST RATE RISK  In the context of the repricing gap model, what is the spread effect? How does…

A: The repricing gap model is based on the consideration that a bank's exposure to interest rate risk…

Q: Illustrate the market interest rate to find the net present worth?

A: Investors frequently find the present worth of the fund flows for the reason that savers receive the…

Q: Create a chart reflecting the convention payback period?

A: The chart is presented below:

Q: What is the formula for the following: Payback period. Net Present Value Internal Rate of return…

A: Accounting:   Accounting is the art of recording, classifying and summarizing in a significant…

Q: What is the future worth of a uniform series payment?

A: The future worth is the value of an asset at a predefined future date which increases at a specific…

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.