Year Project Pizza (100,000) 50,000 50,000 1. Given the cash flows above and a discount rate of 5%, compute the payback period and NPV of Project Pizza. 2. If PHP50,000 is earned on the 3rd year of the project, what is the new NPV of the project? What is the payback period?

Q: Compare M&M Theorem Proposition 1 and Proposition 2 in perfectly efficient market and in the real…

A: The M&M (Modigliani & Miller) approach is used to make investment decisions easily by…

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: Which of the following risks cannot be hedged? A. Credit B. Liquidity C. Currency D. Duration

A: Some risk can be hedged using derivatives

Q: What are the risks of investing in an ESOP?

A: ESOP stands for Employee Stock Ownership Plan. It is a plan that gives an ownership interest in the…

Q: w does expected shortfal

A: Introduction : Value at risk (VaR) can be understood as the metric that measures the magnitude of…

Q: 1. What is a risk you aren't being paid to take?

A: Risks in simple words is a condition wherein a person ability is judged to take a decision which may…

Q: 5.1) What is the meaning of risk and name 2 types of risk.

A: Audit risk - audit risk is the risk associated with the audit opinion. the audit risk the risk of…

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 is Pure Risk and Speculative Risk ? Give me some examples What is Fundamental and particular…

A: Risk refers to the probability of loss that could occur due to the volatility present in the…

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: What are quantitative measurements versus non-quantitative measurements with respect to risk?

A: Risk is used to describe the probability or uncertainty related to a future event with a favorable…

Q: Define within-firm risk

A: Within-firm risk: Corporate (within-firm) risk is a hazard identified with an individual business.…

Q: What is the causes of the financial risk?

A: financial risk - financial risk is the possible danger of losing money from an investment made by…

Q: Explain why risk adjustments are important and how they can affect firm value.

A: Risk adjustments are a critical component of financial analysis and investment decision-making,…

Q: What is financial risk, and how does it arise?

A: Answer: Usually, financial risk refers to a situation where a company is not able to pay its fixed…

Q: What is the y risk-free investment?

A: Risk-free rate of return is the rate of return that an investor expects from an investment in any…

Q: The market efficiency hypothesis claims that, as a rule, the market value and intrinsic value of a…

A: The market  efficiency hypothesis posits that security prices reflect all available information,…

Q: What security provides a good estimate of the real risk-free rate?

A: A Treasury bill (T-Bill) is the short-term liability of US public debt supported for 1 year or…

Q: Basic Elements of Risk-Adjusted Returns?

A: Introduction: Risk adjusted return is a methodology for calculating and evaluating the returns on an…

Q: Q2. Explain the effect of diversification on risk. Be specific about the types of risk.

A: One of the most basic risk management strategies, diversification is an important factor that plays…

Q: How do you measure an investor's risk aversion?

A: The objective of this question is to understand how to measure an investor's risk aversion. Risk…

Q: (a.) What is the underlying principle of valuation?(b). Why is it critical for us to learn the…

A:

Q: What is meant by sovereign risk?

A: Risk is referred as uncertainty or loss. Financial risk is referred as the variability of actual…

Q: Explain the Contrarian Investing Strategy?

A: An investment strategy is a procedure to select the best investment portfolio that gives the maximum…

Q: What kind of investment is considered to be risk-free?

A: A risk-free investment is an investment that has a minimum or no fluctuation from the expected…

Q: averse

A: Risk is involved in everything. Risks will be there right from the task that we do till the…

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: How can an investor eliminate Unsystematic Risk?

A: There are two types of risks: 1) Systematic risk 2) Unsystematic risk. Systematic risk is non…

Q: What is meant by the phrase natural hedging againstexchange rate risk?

A: Hedging is a mechanism that is used to eliminate or minimize the risk of loss that is associated…

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: How efficient is the Efficient Market Hypothesis (EMH)?

A: According to the efficient market hypothesis (EMH), there is a correlation between stock prices and…

Q: Explain if the operational risk is considered a risk or uncertainty? Why? If it is a risk, how can…

A: Operational Loss:   The risk involved in failures of Man, Machine, Material, and Methods during…

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.