Q: Required: a. Determine the discounted rate of return.
A: Formula: Discount rate= Lower Rate +Lower NPV×Higher Rate-Lower RateLower NPV-Higher NPV
Q: standard deviation of historical returns Market beta Tracking error risk Discuss in what scenario…
A: In financial terms, risk can be defined as the possibility that the real profits from an outcome or…
Q: Compare and contrast dollar returns and rates of return.
A: The returns from any investment can be calculated in terms of value (amount terms) or percentages.
Q: define risk in terms of variance or standard deviation of actual returns around an expected return.…
A: The right answer is d. Investment D: Expected Return =10% , Standard deviation=15%
Q: Which one of the following statements is correct? Multiple Choice The risk-free rate of return…
A: The correct answer is "The higher the expected rate of return , the wider the distribution of…
Q: _______ is a measure of risk while _______ is a measure of risk and liquidity.
A: Capital budgeting is the process of distributing the resources(finance) of the organization in…
Q: Present value is based on the concept of: a. discounting. b. duration. c. systematic…
A: Present value means how much the value of future money worth today. The amount received today will…
Q: Portfolio risk is comprised of risk, risk. Select one: a. diversifiable; plus unsystematic
A: Risk is the amount of money lost from an investment. Risks are of two types. 1. Systematic risk 2.…
Q: According to CAPM which of the following statements is (are) correct? #1 Financial assets with the…
A: Capital Asset pricing model is a model which is used to compute the required return of stocks taking…
Q: Standard deviation is measure of total risk while BETA is measure of systematic, undiversifiable…
A: Because you have asked multiple questions, we will solve the first question as per policy. Request…
Q: When would I use the arithmetic average risk premium (as opposed to the geometric risk premium)?
A: Your answer: The arithmetic average risk premium is used when the returns are not reinvested and…
Q: The efficient frontier measures risk by using: Group of answer choices B. Correlation A. Risk-free…
A: Efficient frontier refers to the graphical representation of the set of optimal portfolios…
Q: Which of the following is the correct definition for present value (PV)?
A: Present value is an important concept in finance which is based on the concept of time value of…
Q: The VIX measures Select one: a.Realized volatility B. Current volatility C. Historical volatility D.…
A: The VIX stands for volatility index. Volatility index was the first benchmark which was created by…
Q: What are the (a) expected return, (b) standard deviation, and (c) coefficient of variation for an…
A: The expected return on an investment refers to the weighted average of estimated returns and…
Q: Q3. Explain the following A) Measure of historical returns (Single Asset) B) Measure of historical…
A: Return= Total gain/loss on an asset over a given period of time.
Q: which of the following headings best describes and measures gearing : a- financial position (risk)…
A: Gearing ratio is a financial ratio which compares equity of a company to its debt. Gearing ratio =…
Q: The probability distributions of expected returns for the assets are shown in the following table:…
A: We need to compute return and standard deviation for asset A.
Q: With respect to an investor's utility function expressed as: U = E(r) –Ao², which of the following…
A: Utility Function = Er-12Aσ2 where A is -4, 0 and 4
Q: Basic Elements of Risk-Adjusted Returns?
A: Introduction: Risk adjusted return is a methodology for calculating and evaluating the returns on an…
Q: d. Calculate the variance and standard deviation of the portfolio assuming that the correlation…
A: The variance and standard deviation of a portfolio: The possibility that the actual outcome will be…
Q: standard deviation of returns?
A: Risk is the value of volatility around the mean. It is measured via variance or square root of…
Q: Define each of the following terms: c. Net present value (NPV) method; internal rate of return (IRR)…
A: Net present value (NPV) is the contrast between the present value of money inflows over some…
Q: Define each of the following terms:k. Inflation premium (IP); default risk premium (DRP); liquidity;…
A: The default risk premium or (DRP) is the additional return to be paid by the borrower to the loan…
Q: What is investment? How time value of money, inflation and expected risk Q1. effects investment…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: cial risk could be included in the value of WACC, which is calculated with the formula:
A: WACC = Wd * Rd * (1-Tc)+We * Re The business risk lies with the companies obligation to generate…
Q: Calculate the dollar-denominated returns for each scenario. should be indicated by a minus sign.)
A: Exchange rate(ER) is that rate at which national currency can be valued in terms of foreign…
Q: What does Beta measure and how is it interpreted? Explain the beta values of TSLA and JPM by…
A: In the financial market, the risk is categorized into two parts one is systematic and the second is…
Q: Select all of the time value of money factors that are known in a NPV assessment O Present value of…
A: npv : IT IS THE DIFFERENCE BETWEEN PRESENT VALUE OF CASH INFLOW AND PRESENT VALUE OF CASHOUTFLOW.
Q: Standard deviation measures which type of risk? Select one: a. Total b. Non diversifiable c.…
A: STANDARD DEVIATION IS USED AS AN INDIACATOR OF MARKET VOLATILITY AND THUS OF RISK .
Q: a. A market value-weighted index Rate of return b. An equally weighted index %
A: Rate of return The profit an investor makes from an investment is called the rate of return. It…
Q: Consider the calculation of an external rate of return (ERR). The positive cash flows in the cash…
A: External rate of return is the return rate which is expected to be generated from the project. If…
Q: Identify the difference between the risks considered when measuring volatility. Provide at least 3…
A: INTRODUCTION: Volatility is a measure of the rate of change in the price of an investment over time.…
Q: Which figure of merit provides an interest rate at which the present value of the future cash flows…
A: IRR It is a rate at which the amount of investment equals to PV of the future CF. It is a…
Q: nually. Investors required rate of return is ce
A: Coupon rate =8.47% T=7 Face value=50,000 Price=45,000 Yield to maturity = C +(face value…
Q: How are the following used on a stand-alone and a portfolio basis? 1. Standard Deviation 2.…
A: Stand-alone risk: The risks posed by a single asset, division, or project are referred to as…
Q: escribes the relationship between risk and return.
A: Risk and return are directly related.
Q: Which of the following is included inthe risk-free rate? O A. the default premium O B. the expected…
A: Risk free rate is the return on the asset that has zero risk associated to it. It is a theoretical…
Q: market
A: Systematic risk refers to the type of risk which has an impact on the entire market. Also known as…
Q: Which method does not consider the time value of money? Choose the correct. A. Net present value…
A: Net Present Value or NPV is a technique which determines the net present value of the project and it…
Q: what does high value of standard deviation mean on risk-return ratio
A: Risk-return ratio is the ratio which shows the risk which an investor will get for having one unit…
Provide a descriptive formula for each of the following (e.g., Total risk =?+?):
a. Total risk=
b. Discount rate=
c. Adjusted
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- Make a simple example of the following: a. Capital Gain (or Losses) b. Expected Return c. Real Return d. Risk-free Return e. Required Return f. Holding Period ReturnDefine each of the following terms: c. Net present value (NPV) method; internal rate of return (IRR) method;profitability index (PI)Present value is based on the concept of: a. discounting. b. duration. c. systematic risk. d. compounding.
- In the context of the Capital Asset Pricing Model (CAPM), the relevant measure of risk is A. standard deviation of returns. B. beta. C. variance of returns. D. unique risk.The expected value, standard deviation of returns, and coefficient o below.) \table[[Asset A],[Possible Outcomes,Probability,Returns (%)Which of the following is NOT a profitability ratio? Select one:a. Return on Equityb. Net Profit Marginc. Return on Assetsd. Average Collection Period
- A net present worth equation is used to solve for a ROR by setting the net present worth equation Equal to: Select one: a. -1 b. -10 c. zero d. 1Which of the following statements is true for compensation of risk? a. Higher the risk, lower is the return b. Lower the risk, higher is the return c. Higher the risk, higher is the return d. Higher the risk, zero is the returnIdentify the difference between the risks considered when measuring volatility. Provide at least 3 examples for each.