Suppose you borrowed $30,000 on a student loan at a rate of 8% and must repay itin three equal installments at the end of each of the next 3 years. How large wouldyour payments be; how much of the first payment would represent interest, howmuch would be principal; and what would your ending balance be after the firstyear? (PMT = $11,641.01; Interest = $2,400; Principal = $9,241.01; Balance atend of Year 1 = $20,758.99)
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.
Suppose you borrowed $30,000 on a student loan at a rate of 8% and must repay it
in three equal installments at the end of each of the next 3 years. How large would
your payments be; how much of the first payment would represent interest, how
much would be principal; and what would your ending balance be after the first
year? (PMT = $11,641.01; Interest = $2,400; Principal = $9,241.01; Balance at
end of Year 1 = $20,758.99)
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