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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.
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- Curtis buys a piece of commercial property for $230,000. He is offered a 20-year loan by the bank, at an interest rate of 9% per year. The loan requires annual payments to be made. What is the annual loan paymen Curtis must make assuming the first payment will be due one year from the date of purchase? O A. $40,313.10 O B. $30,234.83 O C. $35,273.97 O D. $25,195.69 O Time Remaining: 00:29:43 Next dtv 11 DD F11 F9 F10 F8 F7 F5 esc F4 F2 F3 F1 & @ 2# $ % 8 1 3. 4 { P < CODan buys a property for $290,000. He is offered a 20-year loan by the bank, at an interest rate of 6% per year. What is the annual loan payment Dan must make? A. $35,396.93 B. $30,340.22 C. $25,283.52 D. $40,453.63Alex would like to purchase a new car for $15,000. How much will his monthly payments be if he took out a 3-year loan at 7% interest? $436.16 $463.16 $466.13 O $406.63
- Fritz Benjamin buys a car costing $14200. He agrees to make payments at the end of each monthly period for 6 years. He pays 6.0% interest, compounded monthly. What is the amount of each payment? Find the total amount of interest Fritz will pay.Fritz Benjami buys a car costing $14200. He agrees to make payments at the end of each monthly period for 6 years. He pays 6.0% interest, compounded monthly. What is the amount of each payment? Find the total amount of interest Fritz will pay.Peter has borrowed $8,600 to pay for his new car. The annual interest rate on the loan is 7.4 percent, and the loan needs to be repaid in four payments. What will be his annual payment if he begins his payment today now? (Round to the nearest dollar.) a. $2,850 b. $2,656 c. $2,385 d. $2,448
- Will has a 30-year mortgage on a $100,000 loan for his house in Florida. The interest rate on the loan is 6% per year (nominal interest), payable monthly at 0.5% per month. Solve, a. What is Will’s monthly payment? b. If Will doubles his payment from Part (a), when will the loan be completely repaid?Humphrey purchases a 100,000 home. Mortgage payments are to be made monthly for 30 years, with the first payment to be made one month from now. The annual effective rate of interest is 4%. After 10 years, the amount of each monthly payment is increased by 319.74 in order to repay the mortgage more quickly. Calculate the amount of interest paid over the duration of the loan. Select one: O A. 52,000 B. 52,100 C. 52,200 D. 52,300 E. 52,400A man plans to take a vacation in 4 years. He wants to buy a certificate of deposit for $1200 that he will cash in for the trip. What is the minimum annual interest rate he must obtain on the certificate if he needs at least $1700 for the trip? Assume that the interest on the loan is computed using simple interest The rate he must obtain is ___%
- Scottie wants to accumulate $30,000 for a down payment for a house. He can only afford to set aside $300 at the beginning of every half-year. The account will credit interest semi- annually at the annual rate of 7.5 % . You wish to know how long it will take Scottie to reach his goal. Find m (the number of compounding periods per year) a. 9 b. 12 c. 4 d. 2 e. 1Kipling wants to have $43256 for a down payment on a house ten years from now. She can either deposit one lump sum today or she can wait two years and deposit a lump sum. Assume an annual interest rate of 1.4%. How much additional money must she deposit if she waits for two years rather than making the deposit today? A. 1076.20 B. 512.53 C. 1032.23 D. 519.70 E. 1061.34Diego plans to invest $500 per month in their tax-free savings account for the next four years. Currently, the investments Diego has chosen are earning an annual rate of 8%. Approximately how much will Diego have in their tax-free savings account at the end of four years if the investment interest rate remains the same? Question 2 options: $28,175 $25,920 $245,066 $27,037