Answer:
A) True
Explanation:
The purpose of creating a portfolio is to diversify investment and achieve risk reduction as famously conveyed by the proverb, "do not put all the eggs in a single basket".
The Capital Asset Pricing Model (CAPM) was developed by William Sharpe and John Lintner. The model explains the relationship between expected return of an investor and the investment risk.
Return earned by a portfolio is the weighted average return of the individual stock returns.
CAPM helps calculate expected return of an investor by the following formula:

wherein,
Risk free rate of return yielded by treasury bonds
B = Beta, which is a coefficient which conveys the degree of responsiveness of security return in relation to the market return.
Return which can be earned on market portfolio
Thus, the relevant risk with respect to a portfolio refers to an individual stock's share of contribution to the portfolio risk.
The formula for discounted payback period is DPP = -ln (1 –
Id/C) / ln (1+d), wherein I is the initial investment, d is the discount rate,
and C is the cash flow. Substituting values, DPP = - ln(1-((0.12)($100)/$27)) /
ln(1+0.12). Therefore, DDP is equal to 5.19 years.
no they should not 100% correct
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Answer:
a. 2 years
b. 1 year
c. 12 times
Explanation:
Interest period is the duration of the deposit. It is the length of time the money would remain in deposit. This is 2 years according to the question
Compounding period = number of times interest would be paid. In the question, this is a year. So interest would be paid every year
The compounding frequency - it is the number of times the deposit would be compounded. It is 12 months
The future value of the deposit can be determined using this formula :
FV = P (1 + r/m)^nm
FV = Future value
P = Present value
R = interest rate
N = number of years
m = number of compounding