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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.
Step by step
Solved in 2 steps
- A mother deposits P15,500 each quarter in a savings bank paying 12.5% compounded quarterly. If she desires to accumulate P175,000, a). how many full deposits must she make? b). How much will the final deposit be (if any) if it is made 3 months after the last full deposit of P15,500? c). How much will the final deposit be if it is made on the last deposit date?A. Zoey deposits $500.00 every quarter into an account earning 5% interest compounded quarterly. How much will Zoey have in the account in 15 years? Zoey will have $44287.25 in the account in 15 years. B. Alternatively, Zoey could make a single deposit into an account earning 5% compounded quarterly for 15 years. How much would the lump sum deposit (single deposit) have to be in order to have saved the same amount of money in the account? Zoey would have to make a lump sum deposit of_____A man buys a car for $36,000. If the interest rate on the loan is 12% compounded monthly, and he wants to make monthly payments of $800 for 36 months. How much must be put down?
- 4. You wish to purchase a house that costs $294,000, and the bank requires you to have 12% of the purchase price as a down payment. Your annual salary is $44,000 and you can save 18% of this salary every year. How long will it take for you to save for the required down payment? about _____ years?8. Hana has to pay RM1,200 every month for 360 months to settle a housing loan at 4% compounded monthly. a) What is the original value of the loan? b) What is the total interest that she has to pay?4. Laura wants to accumulate RM150, 000 in her bank account by depositing RM1000 at the beginning of each month. If interest on the account is 5% compounded monthly, for how long does Laura have to deposit the money?
- Katya wants to make 100 deposits to a bank account. She wants the total present value of the payments to be exactly $200,000. The first 99 deposits of $3,800 will be made monthly, starting one month from today. How much will the 100th deposit be if it is made 100 months from today, assuming that Katya’s effective annual interest rate is 20%? Please do not solve entire problem in excel.Phoebe realizes that she has charged too much on her credit card and has racked up $6,000 in debt. If she can pay $200 each month and the card charges 18 percent APR (compounded monthly), how long will it take her to pay off the debt?2. A man can save 10,000 per month for 2years, If the bank offers 5% compounded monthly, what is n? 3. A man has a loan of 50,000 in a bank that gives an interest rate of 12% compounded quarterly? If he plans to pay after 6months, how much is the interest? 4. A man has a loan of 50,000 in a bank that gives an interest rate of 12% compounded quarterly. How much will he pay quarterly for 5 years if he start paying on the day of his loan?
- 14) John borrowed $12,000 to buy a new car and expects to pay $564.87 per month for the next 2 years to pay off the loan. What is the loan's rate of interest?A recent college graduate buys a new car by borrowing $18,000 at 7.2%, compounded monthly, for 4 years. She decides to pay $458 instead of the monthly payment required by the loan. (a) What is the monthly payment required by the loan? (Round your answer to the nearest cent.)$ How much extra did she pay per month? (Round your answer to the nearest cent.)$ (b) How many $458 payments will she make to pay off the loan? (Round your answer up to the next whole number.) payments(c) How much does she pay in total over the life of the loan by paying $458 per month rather than the required payment?$ If instead of paying $458 per month she only paid the required payment every month, how much would she have paid in total over the life of the loan? (Round your answer to the nearest cent.)$ How much will she save by paying $458 per month rather than the required payment? (Round your answer to the nearest cent.)$A recent college graduate buys a new car by borrowing $16,000 at 6%, compounded monthly, for 5 years. She decides to pay $330 instead of the monthly payment required by the loan. (a) What is the monthly payment required by the loan? (Round your answer to the nearest cent.)$ How much extra did she pay per month? (Round your answer to the nearest cent.)$ (b) How many $330 payments will she make to pay off the loan? (Round your answer up to the next whole number.) payments(c) How much will she save by paying $330 per month rather than the required payment? (Round your answer to the nearest cent.)$
