a. The going rate on student loans is quoted as 8 per cent APR. The terms of the loans call for monthly payments. What is the effective annual rate (EAR) on such a student loan?

Q: 8. An annuity of $5,000 payable every 3 months for 5 years is deferred for 2 years. If money is…

A: Amount of annuity is 5,000 Payment mode Quarterly Time period is 5 years Deferral period is 2 years…

Q: Onse took a loan of P2,000 that is repaid by a payment of P2,500 made 24 months later. Find the…

A: Loan amount is P2,000 Amount repaid is P2,500

Q: The company LLC Corp needs additional funds to expand its production capacities. Therefore it issues…

A: Face Value  €   10,00,00,000.00 Price of Bond 99.87% Time Period of Bond 5 Coupon Payment…

Q: The Price Company will produce 55,000 widgets next year. Variable costs will equal 40 percent of…

A: Solution:- Earnings before interest and taxes (EBIT) means the operating income of an entity before…

Q: Carter Corporate has current assets of $120 million and inventory equal to $30 million. If Carter’s…

A: To calculate the current ratio we will use the below formula   Current ratio = Current…

Q: Calculate a firm's free cash flow if it has net operating profit after taxes of R60,000,…

A: Free cash flow to the firm (FCFF) represents the cash flow from operations available for…

Q: A financial analyst is treating a cash flow stream as a perpetuity.  The present value of the…

A: Present Value of Perpetuity: It represents the present worth of the perpetual cash flow stream. It…

Q: Hawar International is a shipping firm with a current share price of $4.94 and 9.8 million shares…

A: Data given: Current share price=$4.94 Outstanding shares= 9.8 million Borrowed fund =$8.7 million…

Q: A High Torque DC Motors manufacturer estimated that the permanent magnet component will cost $95,000…

A: Cost per year is $95,000  Time period is 5 years At year, manufacturer mistakenly spends $55,000…

Q: Find the EAR in each of the following cases. (Do not round intermediate calculations and enter your…

A: Effective Annual Rate: The effective annual rate of interest is the actual or the real rate of…

Q: If the assumption that companies pay no tax in Modigliani & Miller Proposition is relaxed, while the…

A: Modigliani & Miller Propositions are an economic theory that state that the value of the firm is…

Q: Estimate the expected return on each stock assuming that the interest rate is 2%, the expected risk…

A: Fama French 3 Factor Model: It refers to an asset pricing model that extends on the capital asset…

Q: Present Value of an Annuity On January 1, you win $2,900,000 in the state lottery. The $2,900,000…

A: Present value of annuity can be calculated as: = Annuity payment * Present Value annuity factor (i%,…

Q: 17. In January, Joanna deposited $250 into her savings account. In February, she deposited an…

A: Solution:- When an amount is invested somewhere, it earns interest.

Q: 1. Which of the following statements is FALSE? A) When an investment is risky, there are different…

A: A) If investment is risky then it results into different amount of returns depending upon the risk.…

Q: You are the CEO of a company that has been the subject of a hostile takeover. Thibeaux Piques has…

A: Share buy back- Under this type of transaction, a company buy back its own shares from the share…

Q: Loan payments of $2,750 due 96 days ago and $3,100 due today are scheduled to be repaid with a…

A:

Q: Colby's gross income was $93,000 last year. If he had $1646.92 withheld for federal income tax from…

A: The gross income of a salaried person is the cost to the company. First, all the exemptions and…

Q: hat effective annual rate of return (EAR) would Rayne need to earn if she deposits R1,000 per month…

A: Solution:- When an equal amount is paid each period at end of period, it is called ordinary annuity.…

Q: The Hedge Company has an average age of inventory of 65 days, an average collection period of 60…

A: The cash conversion cycle is calculated with the help of following formula  Cash Conversion Cycle =…

Q: Starting next year you plan to deposit $1000 each year into an account earning 9.25% effective…

A: Solution:- When an equal amount is deposited each period at end of period, it is called ordinary…

Q: The CFO of Expansion Group Ltd. has been presented with an opportunity to undertake a 7-year project…

A: We will first calculate the NPV calculation after that we will calculate the NPV using those…

Q: Finance 1.In the US Balance of Payments accounts, a sale of euros by the US treasury should be…

A: Balance of payment is the record of all international transactions i..e.,  payments and receipts,…

Q: Which of the following statement regarding ratio analysis is incorrect?  Select one: a. Ratios…

A: Financial ratios are an important concept in the world of finance. We use financial ratios like…

Q: An amortized loan means that the principal is gradually paid off during the life of the loan. True…

A: The question is related true or false.

Q: Dylan contributed $700 at the end of every 3 months, for 4 years, into a Registered Retirement…

A: Solution:- When an equal amount is deposited each period at end of period, it is called ordinary…

Q: A firm expects to make payments of 1.1, 1.5, 1.2, 1.4 and 1.9 million for a particular supply over…

A: Solution:- Present value means the value in today’s terms after discounting the future cash flows to…

Q: The Foreman Company’s earnings and common stock dividends have been growing at an annual rate of 5…

A: Answer -  a. 10 percent Po = D1/(ke - g) g = 0.05 Do = $5 ke = 0.10 Dl = Do(1 + g) = 5(1 + .05) =…

Q: What is the project's payback period? Round your answer to two decimal places.  years

A: Payback Period: It is the period in which the project or investment returns its initial cost.  A…

Q: Explain why Fannie Mae and Freddie Mac are an example of moral hazard and based on that critically…

A: Fannie Mae and also Freddie Mac are defined as the moral hazard, which are backed by the home…

Q: I don't understand when you say that the call option or short option will go in the direction of…

A: Hedging with forex is a method for protecting a currency pair's position against a negative move and…

Q: ond Z is an 8% annual coupon bond maturing in 5 years with a face value of maturities is 10%. What…

A: The following information has been provided in the question: Coupon rate =5% Face value =$1000…

Q: What is the present value of a $1,000 60-month annuity due, if r is 6% APR compounded monthly?

A: The time value of money is applied in the case of calculation for the present value of the annuity.…

Q: Provide the types of income subject to Income Tax in Malaysia.

A: An income tax is a type of tax that is levied on individuals or businesses based on their earnings…

Q: Suppose you manage an equity fund with the following securities. A client invests partially in your…

A: The expected return and the standard deviation of the portfolio: The expected return of a portfolio…

Q: percent-of-sales method to preparing a pro forma income statement

A: A weakness of the per cent-of-sales method in preparing a pro forma income statement is  First, the…

Q: and no reject thank u The Bell Weather Co. is a fledgling company. Company planning to increase…

A: The value of stock can be found out from the the multi stage dividend growth model in which first is…

Q: The town's savings and loan association granted Mariella a loan that has maturity value of $2,400…

A: Here, Maturity Value (FV) = P 2,400 Interest rate (r) = 13% Time period (t) = 2 years To Find:…

Q: Tangshan Mining Company must choose its optimal capital structure. Currently, the firm has a 40…

A: Answer - (a) Calculation of value per share for Tangshan Mining under the current capital structure…

Q: An annual perpetuity of $10,000 has a present value of $250,000.  What is the annual interest rate?

A: Present value of an annual perpetuity = Annual cash flow/Interest rate Interest rate = Annual cash…

Q: Starting next year you plan to deposit $1000 each year into an account earning 9.25% effective…

A: As per the given information: Deposits made each year - $1000  Effective annual return - 9.25%…

Q: The pricing efficiency of financial markets can be expected to decrease if the cost of skillful…

A: Skilled financial manpower is very important in financial sector and valuation of assets in…

Q: Stock XYZ is currently trading at $150. One-year futures contract price on XYZ is $152. XYZ is…

A: Arbitrage Free Valuation: It is the method  where financial instrument  or asset  is valued depend…

Q: CAPM The Treasury bill rate is 4%, and the expected return on the market portfolio is 12%. Using the…

A: Because you have asked question with multiple parts (MULTI PART) , we will solve the first 3 parts…

Q: How many monthly payments remain to be paid on an 8% mortgage with a 30-year amortization and…

A: Net present worth (NPV) is the difference between the ongoing worth of cash inflows and the ongoing…

Q: The price of the stock will be $. (Round to the nearest cent.)

A: Stock Price: It refers to the current value of the stock to the buyers and sellers. Thus, it is…

Q: Best Electronics has a quick ratio of 0.53, current liabilities of $7.3 billion, and inventories of…

A: Given: Quick ratio = 0.53 Current liabilities = $7.3 Billion Inventories = $5.2 Billion

Q: atement regarding value of a firm is correct? Select one: a. Firm value is created when the firm…

A: The cost of capital is indeed the minimal rate of return a company must achieve before it may…

Q: You graduate and receive a $3,000 cheque from your grandparents. You decide to save it toward a down…

A: The concept of time value of money will be used here. As per the concept of time value of money the…

Q: What is the future value of a regular $500 60-month annuity (first cash flow starting 1 period from…

A: Future value  Money's value can be described in terms of its future value (compounded) or present…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.