Answer:
The expected excess return will be 11.4%
Explanation:
The S&P 500's excess return is the market return (rM). Using the CAPM model or the SML approach, we can calculate the required/expected rate of return on the stock we are investing in.
The expected rate of return is,
r = rRF + β * (rM - rRF)
Thus, return on the invested stock will be:
r = 0.03 + 1.2 * (0.1 - 0.03)
r = 0.114 or 11.4%
Theres no equation sorryy
Answer:
<u><em>Ethical decisions when dealing with businesses and institutions.</em></u>
It is important in many aspects:
1. Judicial aspects: If you take unethical decision, you have to be responsible for the risk of future audits that might discover your unethical behavior and would have to afront charges.
2. Reputational Aspects: In the long run much of your trust is at stake as you might become a felon and would have to work really hard to change that view of yourself within a community.
3. Personal well being: At the end is very important to have peace of mind.
To determine the amount that must be invested each year, a computation must be made using the formula for the future value of an annuity due. The future value of an annuity can be described as the sum of the future value of each payment.
Investing can be defined as the process of buying assets that increase in value over time and provide returns in the form of income capital gains or payments. The equation for the future value of an annuity due is the sum of the geometric sequence, or can be written as A(1 + r)1 + A(1 + r)2 + ... + A(1 + r)n.
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