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Irina18 [472]
3 years ago
13

Background Info: Tom finds a second personal loan option. This loan would also require him to repay the principal in one lump su

m after three years.
Loan Option B

Principal: $9,000

Type of Interest: Compound Interest

Interest Rate: 8%

Rate of Accrual: Once per year

Use the formula for annual compound interest.

A = P (1 +r/n )^nt

Remember, A refers to the total amount owed.

Calculate the total amount that Tom would repay.

$10,337
$11,337
$12,337
$13,337
Business
2 answers:
Lana71 [14]3 years ago
8 0

Answer

The total Amount that Tom would pay is B.$11337

Explanation

The formula for annual compound interest is ;

A=P(1+r/n)^nt

A=total amount owed

P=principal, $9000

r=rate

t=3years

A=9000(1+8/100)^3

A=$11337



vlada-n [284]3 years ago
5 0

The total amount that Tom would pay is

B) $11,337

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The interviewer should structure the interview in a way that helps him find out:

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Assume that you manage a risky portfolio with an expected rate of return of 18% and a standard deviation of 42%. The T-bill rate
amm1812

Answer:

a. Expected Return = 16.20 %

   Standard Deviation = 35.70%

b. Stock A  = 22.10%

   Stock B  = 29.75%

   Stock C  = 33.15%

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Explanation:

a. To calculate the expected return of the portfolio, we simply multiply the Expected return of the stock with the weight of the stock in the portfolio.

Thus, the expected return of the client's portfolio is,

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The standard deviation of a portfolio with a risky and risk free asset is equal to the standard deviation of the risky asset multiply by its weightage in the portfolio as the risk free asset like T-bill has zero standard deviation.

  • 85% * 42% = 35.70%

b. The investment proportions of the client is equal to his investment in T-bills and risky portfolio. If the risky portfolio investment is considered of the set proportion investment in Stock A, B & C then the 85% investment of the client will be divided in the following proportions,

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