2. When comparing investments with different horizons, the ____________ provides the more accurate comparison. historical annual...
2. When comparing investments with different horizons, the ____________ provides the more accurate comparison. historical annual average effective annual rate arithmetic average average annual return
Homework Answers
B. effective annual rate
The effective annual rate provides the more accurate comparison of investments with different horizons as it expresses the returns in a common period.
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2. When comparing investments with different horizons, the
____________ provides the more accurate comparison. historical
annual...
Time Value of Money: Comparing Interest Rates Different compounding periods, are used for different types of...
Time Value of Money: Comparing Interest Rates Different compounding periods, are used for different types of investments. In order to properly compare Investments or loans with different compounding periods, we need to put them on a common basis. In order to do this, you need to understand the difference between the nominal interest rate (INOM) and the effective annual rate (EAR). The Select interest rate is quoted by borrowers and lenders, and it is also called the annual percentage rate...
Problem 1 (14 marks): Consider the following historical returns on two investments A and B. The...
Problem 1 (14 marks): Consider the following historical returns on two investments A and B. The average risk-free rate during the 2011-2015 period was equal to 3%. Annual return (%) Year Investment A Investment B 2015 5% -5% -2% 2014 -20% 15% 2013 30% 20% 2012 40% 2011 5% 10% a) Calculate the average return and the risk premium for each investment. Which investment is likely to be is riskier? Explain. (6 marks) b) Calculate the standard deviation for each...
1. Below are the historical arithmetic average returns and standard deviations for different asset classes. Asset...
1. Below are the historical arithmetic average returns and standard deviations for different asset classes. Asset class Mean return Standard deviation T-bills 0.035 0.031 Corporate bonds 0.063 0.084 Small company stocks 0.169 0.323 Large company stocks 0.121 0.202 Assume that the returns are normally distributed. Use a standard normal table to answer the following questions. a. What is the probability that the return on corporate bonds will be less than 7%? b. What is the probability that the return on...
The historical returns for two investments—A and B— are summarized in the following table for the...
The historical returns for two investments—A and B— are summarized in the following table for the period 2013 to 2017, A B Year Rate of Return 2013 22.322.3% 12.412.4% 2014 7.27.2% 14.514.5% 2015 14.114.1% 17.817.8% 2016 28.628.6% 18.118.1% 2017 10.310.3% 19.719.7% Average 16.516.5% 16.516.5% . Use the data to answer the questions that follow. a. On the basis of a review of the return data, which investment appears to be more risky? Why? b. Calculate the standard deviation for each...
PLEASE ANSWER THIS QUESTION AND MOST ANSWER TO QUANTITATIVE PROBLEM THANKS YOU Different compounding periods, are...
PLEASE ANSWER THIS QUESTION AND
MOST ANSWER TO QUANTITATIVE PROBLEM
THANKS YOU
Different compounding periods, are used for different types of investments. In order to properly compare investments or loans with different compounding periods, we need to put them on a common basis. In order to do this, you need to understand the difference between the nominal interest rate (INOM) and the effective annual rate (EAR). The -Select- v interest rate is quoted by borrowers and lenders, and it is...
1. Explain and discuss the importance of time value of money when evaluating different investments or...
1. Explain and discuss the importance of time value of money when evaluating different investments or capital expenditures. 2. What are the components of "Required Rate of Return" and why is it an important calculation?
Consider historical data showing that the average annual rate of return on the S&P 500 portfolio...
Consider historical data showing that the average annual rate of return on the S&P 500 portfolio over the past 85 years has averaged roughly 8% more than the Treasury bill return and that the S&P 500 standard deviation has been about 28% per year. Assume these values are representative of investors' expectations for future performance and that the current T-bill rate is 6%. Calculate the utility levels of each portfolio for an investor with A = 2. Assume the utility...
PLEASE ANSWER THIS TWO QUESTION THANK YOU Different compounding periods, are used for different types of...
PLEASE ANSWER THIS TWO QUESTION
THANK YOU
Different compounding periods, are used for different types of investments. In order to properly compare investments or loans with different compounding periods, we need to put them on a common basis. In order to do this, you need to understand the difference between the nominal interest rate (INOM) and the effective annual rate (EAR). The nominal interest rate is quoted by borrowers and lenders, and it is also called the annual percentage rate...
When comparing health conditions between two or more locations, which of the following measures is best...
When comparing health conditions between two or more locations, which of the following measures is best to use [Choose the ONE best answer): A Crude death rate OB. Case-fatality rate C. Adjusted death rate D. Annual mortality rate
5. When comparing 2 economies, the numerical value of the GDP tells us more than the...
5. When comparing 2 economies, the numerical value of the GDP tells us more than the growth rate in GDP. True or False?
Time Value of Money: Comparing Interest Rates Different compounding periods, are used for different types of investments. In order to properly compare Investments or loans with different compounding periods, we need to put them on a common basis. In order to do this, you need to understand the difference between the nominal interest rate (INOM) and the effective annual rate (EAR). The Select interest rate is quoted by borrowers and lenders, and it is also called the annual percentage rate...
Problem 1 (14 marks): Consider the following historical returns on two investments A and B. The average risk-free rate during the 2011-2015 period was equal to 3%. Annual return (%) Year Investment A Investment B 2015 5% -5% -2% 2014 -20% 15% 2013 30% 20% 2012 40% 2011 5% 10% a) Calculate the average return and the risk premium for each investment. Which investment is likely to be is riskier? Explain. (6 marks) b) Calculate the standard deviation for each...
PLEASE ANSWER THIS QUESTION AND
MOST ANSWER TO QUANTITATIVE PROBLEM
THANKS YOU
Different compounding periods, are used for different types of investments. In order to properly compare investments or loans with different compounding periods, we need to put them on a common basis. In order to do this, you need to understand the difference between the nominal interest rate (INOM) and the effective annual rate (EAR). The -Select- v interest rate is quoted by borrowers and lenders, and it is...
1. Explain and discuss the importance of time value of money when evaluating different investments or capital expenditures. 2. What are the components of "Required Rate of Return" and why is it an important calculation?
PLEASE ANSWER THIS TWO QUESTION
THANK YOU
Different compounding periods, are used for different types of investments. In order to properly compare investments or loans with different compounding periods, we need to put them on a common basis. In order to do this, you need to understand the difference between the nominal interest rate (INOM) and the effective annual rate (EAR). The nominal interest rate is quoted by borrowers and lenders, and it is also called the annual percentage rate...
When comparing health conditions between two or more locations, which of the following measures is best to use [Choose the ONE best answer): A Crude death rate OB. Case-fatality rate C. Adjusted death rate D. Annual mortality rate
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