Answer:
The correct answer is 2. provides the supporting reasons before the primary message.
Explanation:
Answer:
you can buy and get stuff in physical form.
Explanation:
Answer:
How should she compute her required annual investment?
$ 36.987
Explanation:
With the present value formula we can calculate how she has to invest today to get $45,000 at the end of the 5 years, with a compounded rate of 4%.
Principal Present Value = F / (1 + r)^t
In this case we have the future value and we need to find the present value that we have to invest to get the money expected.
Principal Present Value = 45,000 / (1 + 4%)^5 = $36,987
If we invest today $36,987, with a compounded interest rate of 4% we get at the end of the period, 5 years, the total sum of $45,000.
Answer:
a) 16%
b) 2.25
c) Increase in expected market risk premium
Explanation:
Expected standard deviation of market return = 20%
measure of risk aversion ( A ) = 4
a) Determine a reasonable expected market risk premium
= A * ( std ) ^2
= 4 * ( 20%)^2
= 16%
b) determine Value of A
market risk premium = A * ( std )^2
∴ A = 9% / ( 20% ) ^2
= 0.09 / 0.04
= 2.25
c) If investors become more risk tolerant the expected market risk premium will increase
