The market where existing securities are sold is: a the primary market b the secondary market c the economic market d the financial market You bought an asset for $10,000 and sold it for $20,000 after 10 years. What was the annual rate of return on this investment? (Choose the closest rate)

The market where existing securities are sold is: a the primary market b the secondary market c the economic market d the financial market You bought an asset for $10,000 and sold it for $20,000 after 10 years. What was the annual rate of return on this investment? (Choose the closest rate)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: Which of the following investments a return-maximizing investor would select? Select one: O a. An…

A: Please refer to the image below.

Q: (Related to Checkpoint 5.6) (Solving for i) You are considering investing in a security that…

A: Present value: It is the current worth of cash flows that are expected to happen in the future.

Q: What is the standard deviation of the market portfolio

A: The market consists of only 2 securities. We first need to determine the weight of these assets as…

Q: The annual growth rate of your investment can be measured by A. THE ANNUAL MEAN OF YOUR ANNUAL…

A: Several methods have been prescribed to measure the annual growth rate of an investment. We have to…

Q: which of the following investments that pay will $5000 in 12 years have a higher price today?

A: Present Value: It is the present worth of the future amount and the present value is computed by…

Q: Consider a portfolio dependent on the price of a single asset with a delta (Δ) of 5,000 and a gamma…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: If you perform a NPV analysis on a perspective investment using a "d" = 15% and: a. the…

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: c. If the historical annual returns of an Investment in various Economic Conditions (with their…

A: Expected return on the investment = (Poor condition return x Probability) + (Normal condition return…

Q: Using the following information determine the expected rate of return for a risky asset using CAPM,…

A: Security Market Line is the graphical representation of the Capital Asset Pricing Method. Expected…

Q: Capital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset…

A: According to Capital Asset Pricing Model ,k = Rf + [ b * (Rm-Rf) ]wherek = Required return for…

Q: We have purchased a security with the following payment schedule: Year 1 2 3 Payment $100 S150 S400…

A: Rate of return refers to the percentage of earning from the investment or the purchase of the…

Q: Consider three securities that will pay risk-free cash flows over the next three years and that have…

A: For $ 100 cash flow received in one year, the price is $ 92.42 For $500 Cash flow, the price…

Q: Give typing answer with explanation and conclusion Exactly one year ago, an investor made an…

A: Alpha is a term that is used to describe the predictive ability of a fund manager. Alpha is computed…

Q: Assume the returns from holding an asset are normally distributed. Also assume the average annual…

Q: Give typing answer with explanation and conclusion Q87. You are considering two investments.…

A: APR stands for annual percentage rate and it is the stated rate or the nominal rate which is 10% for…

Q: Consider two assets, A and B. A earns +4%, -5%, or +3%, in scenarios 1, 2, and 3. B earns -5%, +3%,…

A: The calculations for the expected rates of return and standard deviations for each asset, and the…

Q: Click the icon to see the Worked Solution. The required return for investment A is %. (Round to one…

A: Capital Asset Pricing Model (CAPM): This model attempts to explain the relationship between the…

Q: I. Consider a risky asset X. We suppose that the rate of return of the asset per year was observed…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Two investments generated the following annual returns: 20X0 20X1 20X2 20X3 20X4 Investment X 13% 17…

A: In the given case , we have given each investment's annual returns. Average annual rate of return =…

Q: You took a long position on EUR when the prevailing market rate was EUR/USD: 1.3223-1.3227. After…

A: Since we have taken long position in EUR, we need to sell EUR to square off the position. The…

Q: An investment promises the following payments: March 3 $1000; March 18 $2000; March 26 $3000. If the…

A: To determine the value of the investment as on March 28th we need to take the FV of all the payments…

Q: otal return= 10% with profitability 50% total return= 20% with…

A: The expected return is derived by dividing the number of possible outcomes (yields) by the…

Q: Differentiate between the following types of markets: physical asset vs. financial markets, spot vs.…

A: Kindly post the other two questions in a separate post.

Q: Consider two securities that pay risk-free cash flows over the next two years and that have the…

A: Arbitrage refers to the profit that an investor earns because of the difference in the value of the…

Q: The formula for calculating the discount rate to use in net present value (NPV) calculations is as…

A: Present value is the discounted value of the amount of future value. Discount rate is calculated…

Q: Two investments generated the following annual returns: a. What is the average annual return on each…

A: Annual return The return an investor receives from an investment within one fiscal year is called…

Q: A. 1 year interest rate? b. 2 year interest rate? c. 3 year interest rate? d. 4 year interest…

A: Given:

Q: Consider an investment whose annual return is normally distributed with a mean of 6% and a standard…

A: A typical risk management metric in the banking sector is value at risk, or VAR. Value at Risk is a…

Q: ok Assume the returns from holding an asset are normally distributed. Also assume the average annual…

A: Using NORMDIST to Analyze Asset ReturnsWe can use the NORMDIST function in Excel to analyze the…

Q: The required return of a risk-free asset can be approximated by The pure time value of money and…

A: NO risk assets are called risk free assets.

Q: An investment offers a total return of 11 percent over the coming year. Alex Hamilton thinks the…

A: 1) Nominal return is 11% and real rate of return is 7.4% Nominal rate of return when adjusted for…

Q: C. How much is the market paying per share for growth opportunities (i.e., for an ROE on future…

A: Part 1: The Price of the stock is computed by = Expected Dividend(Cost of capital - Growth Rate)…

Q: Suppose that a 10-year T-note is purchased with a face value of $20,000 and a coupon rate of 3.4%…

A: Return means an additional amount earned over the invested amount. It is computed on the basis of…

Q: Suppose the risk-free rate is 5%. The expected return and standard deviation of a risky asset are…

A: Expected return (Re) = 10% Risk free rate (Rf) = 5% Standard deviation (SD) = 20%

Q: What is the shape of the yield curve given the term structure below? What expectations are investors…

A: Yield Curve: The yield curve plots the different interest rates and maturities of bonds. It acts as…

Q: An annual percentage rate (APR) is determined by annualizing the rate using compound interest.…

A: As the question contains multiple question , I will be solving only 1st 3 questions. For remaining…

Q: Suppose the returns on an asset are normally distributed. The historical average annua return for…

A: Here,HistoricalAverage Annual Return is 5.7%Standard Deviation is 18.3%

Q: When interest is compounded continuously, the rate of change of the amount x of the investment is…

A: Continuous Compounding interest assumes interest is compounded and added back into the balance an…

Q: You are given the following partial covariance and correlation tables from historical data:…

A: Here, Covariance between Security K and Market is 0.0021600 Standard Deviation of Market is 4.3%

Q: (Capital Asset Pricing Model) The expected return for the general market is 10.5 percent, and the…

A: The capital asset pricing model is a risk adjusted model which will be helpful in finding out the…

Q: Which of the following investments that pay will $18,500 in 8 years will have a higher price today?…

A: To determine the Investment which have a higher price today, have to calculate the Present Value…

Q: Compute the following: a. The average rate of return, giving effect to straight-line depreciation on…

A: Solution:- Given, Spanish Peaks Railroad Inc. is considering acquiring equipment at a cost =…

Q: Using the following information determine the expected rate of return for a risky asset using CAPM,…

A: Security Market Line is the graphical representation of the Capital Asset Pricing Method. Expected…

Q: 1. Solve for Return of Risk Free Asset and its average Year Risk free rate (%) Inflation (%) Return…

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…

Q: If Po is the initial price of the security, P₁ is the price after you hold it for a year, and X…

A: A rate of return on an asset is the return which has been earned from such asset be it a financial…

Question

The market where existing securities are sold is:

	a	the primary market
	b	the secondary market
	c	the economic market
	d	the financial market

You bought an asset for $10,000 and sold it for $20,000 after 10 years. What was the annual rate of return on this investment?

(Choose the closest rate)

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

(3) Today you have paid $275 for an investment that pays $100 in one year, $500 in two years,and $X in 4 years. Assuming the market interest rate is 100% and the net present value of theinvestment is zero, what must be true about X?(a) X is greater than $2,500(b) X is greater than or equal to $2,000 but less than $2,500(c) X is greater than or equal to $1,500 but less than $2,000(d) X is greater than $1,200 but less than $1,500(e) X is less than or equal to $1,200
The risk-free rate is currently 3.3%, and the market return is 14.8%. Assume you are considering the following investments: Investment Beta A 1.54 B 1.16 C 0.51 D 0.11 E 2.14 . a. Which investment is most risky? Least risky? b. Use the capital asset pricing model (CAPM) to find the required return on each of the investments. c. Find the security market line (SML), using your findings in part b. d. On the basis of your findings in part c, what relationship exists between risk and return? Explain.
Suppose the term structure of risk-free interest rates is as shown here: a. Calculate the present value of an investment that pays $1,000 in 2 years and $4,000 in 5 years for certain. b. Calculate the present value of receiving $900 per year, with certainty, at the end of the next 5 years. To find the rates for the missing years in the table, linearly interpolate between the years for which you do know the rates. (For example, the rate in year 4 would be the average rate in year 3 and year 5.) c. Calculate the present value of receiving $2,700 per year, with certainty, for the next 20 years. Infer rates for the missing years using linear interpolation. (Hint: Use a spreadsheet.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) 2 years 3 years 5 years 7 years 1 year 2.06 2.44 2.64 3.22 3.74 Term Rate (EAR, %) Print Done 10 years 4.25 20 years 5.09 I X t cent.)
Capital asset pricing model (CAPM) For the asset shown in the following table, use the capital asset pricing model to find the required return. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Risk-free rate, RF 1% The required return for the asset is %. (Round to two decimal places.) C Market return, m 5% Beta, b 0.5
Calculate the required rate of return for an asset that has a beta of 1.01, given a risk-free rate of %3.4 and a market return of %9.1 . b. If investors have become more risk-averse due to recent geopolitical events, and the market return rises to %11.6, what is the required rate of return for the same asset? a. The required rate of return for the asset is enter your response here%. (Round to two decimal places.) Part 2 b. If investors have become more risk-averse due to recent geopolitical events, and the market return rises to 11.6%, the required rate of return for the same asset is enter your response here%. (Round to two decimal places.)
Which of the following investments will experience the largest change in its market value as a result of changes in the level of interest rates (we are talking about the absolute value of the change, up or down)? Suppose interest rates go up or down by 50 basis points (0.5%). Rank the investments from 1 to 4 where a 1 is the most affected (largest absolute change in value) while a 4 is the least affected (smallest absolute change in value). A: $1 million invested in 3-month Treasury bills. 请选择~ B: $1 million invested in STRIPS (zero coupons) maturing in three years. |请选择 C: $1 million invested in a Treasury note maturing in three years. The note pays a 5% annual coupon. |请选择︾ D: $1 million invested in a Treasury note maturing in three years. The note pays a 10.0% annual coupon. |请选择
The formula for calculating the discount rate to use in net present value (NPV) calculations is as follows: PV = 1 + (1+r)" Where 'n' represents: OA. The number of years you are investing OB. The cost of capital - stated as a percentage OC. The initial investment OD. The cost of capital - stated as a decimal
Which of the following is correct? O A. Common stock valuation usually treats the common stock as a perpetuity. OB. The appropriate measure for risk according to the capital asset pricing model is beta. OC. The present value of a $100 perpetuity discounted at 5% is $2,000. OD. The incremental cost is the cost of making a choice defined in terms of the next best alternative that is foregone. OE. Both B and C.
(Capital Asset Pricing Model) Johnson Manufacturing, Inc., is considering several investments. The rate on Treasury bills is currently 7.5 percent, and the expected return for the market is 10.5 percent. What should be the expected rate of return for each investment (using the CAPM)? Security A B C D Beta 1.62 1.02 0.71 1.34 a. The expected rate of return for security A, which has a beta of 1.62, is%. (Round to two decimal places.)
You are analyzing a Time Series of historic market information and found the following information for a particular investment security: the Rate of Return in 2012 was -6.72%; was 18.22% in 2013; was 7.75% in 2014; was 11.45% in 2015; was 4.94% in 2016; and was 18.11% in 2017. What is the arithmetic average rate of return? Show your answer as a percentage rounded to two places (12.34% for example). Group of answer choices 7.64% 8.96% 8.14% 7.24% None of the above
Suppose stock A's return is related to the market return by: RetA=0.6*Market Return + 0.04* (Market Return)² What is the change in stock A given a change in the market return? Suppose stock B's return is related to the market return by: RetB=0.6*Market Return What is the difference in returns between A and B if the market return is 5%? What is the difference if the market return is -5%?
Assume that you are given the following historical returns for the Market and Security J. Also assume that the expected risk-free rate for the coming year is 4.0 percent, while the expected market risk premium is 15.0 percent. Given this information, determine the required rate of return for Security J for the coming year, using CAPM. Year 1 2 O21.20% 3 4 5 6 O22.34% O 23.49% O24.63% O24.10% Market 10.00% 12.00% 16.00% 14.00% 12.00% 10.00% Security J 12.00% 14.00% 18.00% 22.00% 18.00% 14.00%