Question1Completion Status:3425A Moving to another question will save this response.aestion 1Danica Tribbiano believes expected inflation is 2.25% and the real rate of return is 2.75%. Based on this information, she estimates the risk-free rate of return is:OA. 5.00%.OB. 0.50%.OC. 2.25%.A Moving to another question will save this response.F5F6F78F8PF9F10:-F11F12 Moving to another question will save this response.Question 14Danica Tribbiano believes expected inflation is 2.25% and the real rate of return is 2.75%. Based on this information, she estimates the risk-free rate of return is:OA. 5.00%.B. 0.50%.O C. 2.25%.A Moving to another question will save this response.A+F3$F5%PF6F7&MDF8*8F9F10:-F11O+F12

Here, Inflation rate = 2.25% Real rate of return = 2.75% To Find: Risk-free rate of return =?

Answered: Danica Tribbiano believes expected…

Danica Tribbiano believes expected inflation is 2.25% and the real rate of return is 2.75%. Based on this information, she estimates the risk-free rate of return is: OA. 5.00%. OB. 0.50%. OC.2.25%.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 26P

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Concept explainers

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.

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