/hat is the exact rate of return?

Q: What is market value ratio?

A: Ratio is the relation between two different quantities obtained after dividing one by another.

Q: lue (NPV) anc g decisions? Pl

A: Introduction : Net present value  can be understood as the value which depicts the actual worth…

Q: of computing vat payable

A: VAT refers to the type of tax imposed by the government over the sale of goods and services.

Q: What is the formula to find an expected in returns in CAPM

A: In this question, we are required to determine the formula for expected return in Capital Asset…

Q: Define total net present value (TNPV)

A: Total net present value of an investment is the present value of the future cash inflows due to a…

Q: Create a chart reflecting the conventional payback period?

A: The question is based on the calculation of payback period.

Q: What is the marginal rate of return? How is it calculated?

A: Answer: Marginal rate of return can be defined as the return obtained or received by means of…

Q: WHAT IS THE VALUE OF DISCOUNTED FLOWS

A: As per Time value of money, there are present values as well as future values.

Q: Which are the more complex applications of rate-of-return techniques/

A: The question is based on the concept of rate of return and its application in finance

Q: Define Net realizable value.

A: Net realizable value is the expected cash to be received against a given asset.  Thus, Net…

Q: What is net present value?

A:

Q: What is the horizon value? Why is it also called the terminal valueor continuing value?

A: Horizon value is the value of the expected dividend that will be received after the horizon date.

Q: ected rate of return concept differ from that of the rea

A: There are many method of valuation of stock based on expected rate and realized return and dividends…

Q: Explain Computing Holding Period Returns?

A: Introduction: Holding period returns (HPRs): Holding period return (HPR) is one of the investment…

Q: What is meant by the term abnormal rate of return?

A: Abnormal rate of return is return earned above or below the normal rate of return.

Q: Comparison of NPV, IRR or Payback period

A: The net present value (NPV) is the difference between the present value of cash inflows and…

Q: How is the payback period determined?

A:

Q: What is the Decreasing Returns to Scale? Can you please explain and give a definition, thank you.

A: The concept of decreasing return to scale is majorly used in production process and production…

Q: What is the math behind the net present value calculation?

A: Net present value is based on capital budgeting technique. Net present value is used to measure the…

Q: What is future value, FV?

A: Future Value: The future value is the value of the present amount compounded at an interest rate…

Q: What is limitation of Payback period, Net Present Value (NPV) and Internal rate of return (IRR).…

A: i) Payback period: Payback period is the expected time period which is required to recover the cost…

Q: Explain prime rate

A: Introduction: Usually an interest rate is the amount that a lender pays calculated as a percentage…

Q: What is meant by partitioning the internal rate of return? Why is this procedure meaningful?

A: Internal rate of return is defined as the annual rate of earnings on an investment and unlike income…

Q: Which of the following is not a variable in the basic present value equation? Multiple Choice…

A: Investors are holding securities for the purpose of gaining the returns. The return is calculated…

Q: What is payout period and how is it calculated?

A: Companies employ various methods in the process of selection of the most financially appropriate…

Q: How can we calculate the Rate-of-Return with Excel?

A: The question is based on the concept of calculation of rate of return (ROR), (ROR) is percentage…

Q: Compare the mutually exclusive alternatives based on the rate of return?

A: Mutually exclusive projects are the projects out of which one best project is selected due to lack…

Q: What do we mean by internal rate of return (IRR)?

A: Internal rate of return : Internal rate of return is one of the techniques used in capital budgeting…

Q: what is payback period

A: Capital Budgeting: It is the planning process used to determine whether an organization invests in a…

Q: What is a transfer price?

A: Inter division transactions:  When the different divisions under the same business organization are…

Q: how was the rate calculated, without excel

A: Given, The loan amount is $1000 Rate is 4% Fifth installment is $525

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.