what is the difference between a required rate of return and an expected rate of return?

Q: You own a one-year European call option to buy one acre of Los Angeles real estate. The exercise…

A: Options and their pricing: Options give their holders the right, but not the obligation, to purchase…

Q: Suppose you have deposited $10,000 in your high-yield saving account today. The savings account pays…

A: Initially, we shall calculate the amount available in the account after 1.5 years which can be…

Q: Consider the following alternatives below. Based on a 7% interest rate, assuming both alternatives…

A: Equivalent Uniform annual Cost Method:- When  life of two mutually exclusive projects are different…

Q: 8 years from now Jennifer will need $750,000 to renovate a rental property at interest rate of 9%…

A: The time value of money concept is applied to determine the equated instalment amount of deposit to…

Q: Find the rate of markdown and the markdown. Regular Selling Rate of Markdown Price Sale Price…

A: Answer - Markdown -  A markdown is an amount by which you decrease the selling price in order words…

Q: Evaluate the three differing strenghts of market efficiency (weak form, semi-strong form and strong…

A: Efficient market hypothesis states that Market  Value of the stock is Equal to Intrinsic Value of…

Q: Property worth $77,490.00 can be purchased for 10% down and mortgage payments f $1355.00 at the end…

A: Solution:- When an equal amount is paid each period at the end of period, it is called ordinary…

Q: 0 Shares of ABT stock offer an expected total return of 14.6 percent. What is the dividend yield if…

A: Answer - Total Return Estimated -  Formula for Total Return Estimated is given below :    Yield +…

Q: I just need to know the formulas to input into the NPV along with the 4 NPV formulas on the bottom

A: NPV is PV of net benefit arising from the project over the life of the project. It is computed by…

Q: Determine the shape of the yield curve by using an interest rate theory and share your opinion on…

A: The yield curve is a graph that compares the yields (interest rates) of bonds with similar credit…

Q: 8 The Flying Dove has 1,600 bonds outstanding with a $1,000 par value, a coupon rate of 5.5 percent,…

A: Weighted average cost of capital (WACC) in the company means total cost of equity and debt financing…

Q: A two-share portfolio held by an institutional investor has the following information: Years (t)…

A: Hi There, thanks for posting the question. But as per Q&A guidelines, we must answer the first…

Q: what would have been the maximum amount that should be invested? Use interest rate of 9% compounded…

A: A stream of equal cash flows (CF) paid or received periodically is termed as annuity. Ordinary…

Q: A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a…

A:

Q: when comparing a firm's ratios to an industry, is it bad to he below average? explain your answer…

A: In finance we often use financial ratios to determine and evaluate the financial health and position…

Q: What is the future value of a $1000 deposit made today, in 7 years, if r = 10% APR compounded…

A: The time value of money is used to determine the future value and present value of any amount given.…

Q: A project your firm is considering for implementation has these estimated costs and revenues: an…

A: The costs incurred to keep the machinery in a working position are known as maintenance charges.…

Q: ompare three alternatives on the basis of their capitalized costs at i = 13% per year and select the…

A: Capitalized cost is the present value of all cost that may occur during the economic life of the…

Q: What price is paid for a P2000 par value 10-year bond with 8.4% coupons paid semiannually that is…

A: Bond: It represents debt security issued by the company for raising capital from debt investors.…

Q: Medallion Cooling​ Systems, has total assets of $10,900,000​, EBIT of $1,990,000​, and preferred…

A: The earnings per share ratio are used to measure a company's profitability. It shows the amount of…

Q: Finding the Term( answer any 2) 1. How long will it take for P28, 280 amount to 37, 640 if invested…

A: Future Value: The future value is the amount that will be received at the end of a certain period.…

Q: "s Hardwoods has a dividend payout ratio of 45 percent, a return on assets of 9.4 percent, anc quity…

A: Growth rate can be calculated from the return on equity and retention ratio of the company that is…

Q: ACME Car Wash has the option to invest in one of the following two vehicle dryer systems. MARR is…

A: Data given:   Vehicle Dryer 1 Vehicle Dryer 2 Capital Investment ($) 145000 157000 Net Annual…

Q: Given: 27,000 shares cumulative preferred stock ($5.25 dividend per share): 54,000 shares common…

A: Solution:- Dividend is the amount of return granted to shareholders of a company.

Q: A piece of machinery costs P50,000 and has an anticipated P8,000 salvage value at the end of its…

A: Depreciation is a gradual decrease in the value of asset due to normal wear and tear, obsolescence…

Q: Accumulate ₱42,000 at 13% compounded quarterly for 5 years and 3 months.

A: Compound interest is that form of interest under which interest is charged on principal and interest…

Q: A basic rationale for the objective of maximizing the wealth position of the stockholder a rimary…

A: Shareholder wealth maximization has been the underlying driving force for companies and their…

Q: Managed funds are often categorised by the type of investments purchased by the fund. These include…

A: A mutual fund is a form of financial vehicle that invests in securities such as stocks, bonds, money…

Q: # 1 Interest Amount Present Value $16,775.00 Interest Rate Time 0.5% per month 6 months Future Value

A: Future Value: The future value is the amount that will be received at the end of a certain period.…

Q: During the first month of operations, the following transactions occurred for Blossom Inc.: Apr. 1…

A: Journal Entries

Q: 4. You borrowed $10,000 on a 10% discounted loan for a period of 8 months. a. What is the loan's…

A: Mortgage/ Borrowings:  Borrowings are the loan which is taken by the individual to meet its…

Q: buyer working with QRS Realty wants to make an offer on a property. To save time, the buyer makes a…

A: Any verbal agreement are not valid legally binding and we cannot enforce any one who made verbally…

Q: Kareem received a $1900 bonus. He decided to invest in a 3 year certificate of deposit (CD) with an…

A: Future value of investment is amount deposited and interest accumulated over the period of time and…

Q: 19 You borrow $5,600 to buy a car. The terms of the loan call for monthly payments for four years at…

A: Given,  Loan taken = 5600 Monthly Installments = 4 years * 12 months = 48 months Interest rate per…

Q: You own a one-year European call option to buy one acre of Los Angeles real estate. The exercise…

A: A call option is an option that gives the buyer the right but not the obligation to purchase the…

Q: Your firm is considering the purchase of equipment from two suppliers.  Supplier A requires payment…

A: To compare the alternatives, present value of each alternative shall be calculated and compared to…

Q: Wayne borrowed money to purchase his son's hockey equipment. He made month-end loan payments of $55…

A: Wayne Equipment: Month end  payments = $55 Interest rate Compounded Monthly is 7.8% Time period 2…

Q: such bonds was 12%-that is, if r = 12%? Explain your answer. 7-10 CURRENT YIELD, CAPITAL GAINS…

A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…

Q: The following data on the Bond Record Company are​ available: Earnings available for common…

A: Data given: Earnings available for common stockholders ​$700,000 Number of shares of…

Q: 19 Jeanette's Medical Supply has a beta of 1.47 and its RWACC is 11.8 percent. The market risk…

A: Given: Particulars   Beta 1.47 Market risk premium 7.40% Risk free rate 3.60% Cash flow…

Q: 1.A Assume that a Peruvian company, DMB LLC, just reported its earnings this year. The reported…

A: Given: Revenue = $10 million Cost = $9 million Discount rate = 8%

Q: Finance Summarize the author’s position in “S Corps, C Corps, and B Corps, based on the article "Oh…

A: Finance is a broad phrase that encompasses money, investing, and other financial products research…

Q: is considering purchasing equipment that will reduce costs by P40,000. The equipment costs P300,000…

A: In the future worth method we find out the future value of cost and benefits and see whether they…

Q: Jaleel is holding some Tesla shares (NASDAQ: TSLA) and The TSLA stocks are currently trading at $985…

A: Given, The price of the stock is $985

Q: $1500 is invested semi-annually for 3 years into a fund that pays 6.8% per year, compounded semi-…

A: Solution:- When an equal amount is invested each period, it is called annuity.

Q: Insuring clause in an Accident & Health policy states which of the following information? A. The…

A: There are different clause in the insurance policy that what is covered and what is not covered and…

Q: Aya and Sakura have now saved up their down payment to buy a home, but they still need to borrow to…

A: When you take out a home mortgage from a bank then you pay same monthly amount each month over the…

Q: You are planning on taking out a mortgage and would like to determine the cash value for a given…

A:

Q: Which statement is false? a) If you expect interest rates to rise, you would prefer a fixed-rate…

A: The answer is option d. The premium on CMHC mortgage loan insurance is maxed at 4.5% for traditional…

Q: If interest is 8%, what is the present worth of cost of 12 years of Machine X?

A: Time value of money (TVM) refers to the method or technique which is used to measure the amount of…

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.