The rate of return I would earn if you bought the asset is 16.91.
<h3>What is the internal rate of return?</h3>
Internal rate of return is the discount rate that equates the after-tax cash flows from an investment to the amount invested. It is a capital budgeting method.
IRR can be calculated with a financial calculator
- Cash flow in year 0 = $-5250
- Cash flow in year 1 = $750
- Cash flow in year 2 = $1000
- Cash flow in year 3 = $850
- Cash flow in year 4 = $6250
IRR = 16.91%
To learn more about the internal rate of return, please check: brainly.com/question/24172627
The answer to your question is the letter d.
Answer:
$34.74
Explanation:
Three year forward Rate = Spot Rate * e^(10%*3) -Dividend Year 1 *e^(10%*2) -Dividend Year 2 * e^(10%*1)
Three year forward Rate = 30*e^(10%*3) - 2*e^(10%*2) - 3*e^(10%*1)
Three year forward Rate = 30*1.3498588 - 2*1.2214028 - 3*1.1051709
Three year forward Rate = 40.495764 - 2.4428056 - 3.3155127
Three year forward Rate = 34.7374457
Three year forward Rate = 34.74
Thus, the three-year forward price of the asset is $34.74
Answer: E. Capital asset pricing model
Explanation:
The Capital Asset Pricing model can be used to calculate the expected return of a security given some variables including its systematic risk which is measured by its beta.
The formula is;
Expected Return = Risk free rate + beta(market premium)
The model therefore shows that when the systematic risk is high, the expected return will also be high as well as helping to show the magnitude of the effect of a change in the market premium.
