The required rate of return on the stock of CD will be 10.86%.
<h3>What is rate of return?</h3>The capital gains made from investment in such asset class(s) over a specific period is the rate of return of such investment. In the above case, the rate of return using the given values will be,
Hence, the required rate of return is calculated as 10.86%.
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Answer:
3.56%
Explanation:
In this question, we use the Rate formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
NPER = 11 × 2 = 22 years
Present value = $1,000 × 104% = $1,040
Future value = $1,000
PMT = 1,000 × 4% × (6 months ÷ 12 months) = $20
The formula is shown below:
= Rate(NPER;PMT;-PV;FV;type)
The present value come in negative
So, after solving this, the answer would be 3.56% ( 1.78 × 2)
