I would say that for most people, buying an apartment or a house would be the most major thing they could do that would affect their net worth. Initially it would be mostly a liability at first but as it appreciates, especially if it is in a big city where the population keeps growing then it most likely will appreciate and then the owner's assets will increase since their equity will increase.
Answer:
E) none of the above
12.70% and 2.49% standard deviation
Explanation:
We multiply probability by the outcome to get the weighted amount, we add them and get the expected return.
probability outcome weighted
0.25 0.10 0.0250
0.45 0.12 0.0540
0.30 0.16 0.0480
expected return 0.1270
Now that we got the expected return at 12.7%
We now subtract the possible outcome with the expected return and square them:
(0.127-0.1)^2
(0.127-0.12)^2
(0.127-0.16)^2
Then we add them and divide by the sample which is 3
0.000622
²√ 0.000622 = 0.024944383
<u><em>Final step,</em></u> will be the square root which gives the standard deviation
of 2.49% = 0.024947
Answer and Explanation:
The computation of the effective annual rate in each of the following cases are
1.
Effective annual rate = [(1+annual percentage rate ÷ period)^period]- 1
= (1 +0 .09 ÷ 4)^4 - 1
= 9.31%
2.
Effective annual rate = [(1+annual percentage rate ÷ period)^period]- 1
= (1 + 0.16 ÷ 12)^12-1
= 17.23%
3.
Effective annual rate = [(1+annual percentage rate ÷ period)^period]- 1
= (1 + 0.12 ÷ 365)^365-1
= 12.75%
4 .
Effective annual rate = [(e)^Annual percentage rate]-1
e=2.71828
So,
=[(2.71828)^0.11]-1
= 11.63%
Answer:
10.4%
Explanation:
The computation of expected return on a portfolio is shown below:-
Expected return = Risk Free return + 5%Beta ( Market Return - Risk Free return)
= 5% + 0.60 × (17% - 8%)
= 5% + 5.4%
= 10.4%
Therefore for computing the expected return on a portfolio with a beta of .6 we simply applied the above formula.
The market return less risk free return is known as market risk premium
Answer:Yield to maturity is 9.59%; After tax cost of debt =7.672%
Explanation:
A) Yield to maturity ={ C + (FV-PV)/t} / {(FV +PV)/2}
Where C – Interest payment = $90
FV – Face value of the security
= $1000
PV – Present value/curent market value = $960
t – years it takes the security to reach maturity= 10 years
imputing the values and calculating,
yield to maturity ={ C + (FV-PV)/t} / {(FV +PV)/2}
= $90 + (1000-960)/10} / 1000 + 960 /2
$90 + 4= $94 /980= 0.0959
therefore Yield to maturity is 9.59%
B) After tax cost of debt = Yield To Maturity x (1 - tax rate)
=9.59% x (1-20%)= 9.59% x (1-0.2 )= 9.59% x 0.8 =
9.59 % x 80%=7.672%
