One of the easiest method of differentiating Alternative Investments from the Traditional Investment is by stating what it is not, critically evaluate this statement.
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One of the easiest method of differentiating Alternative Investments from the Traditional Investment is by stating what it is not, critically evaluate this statement.
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- What are the principal objections to the use of the average rate of return method in evaluating capital investment proposals?Describe the process of accepting or rejecting an investment to make a comparison of alternative investments?In choosing where to invest, return and risk for an investment must be compared. It is not sufficient to choose an investment based only on return without taking risk into consideration. There are two methods or measures that compare return and risk. State these two methods, the formula for each and the criteria used in evaluating alternative investment of each method.
- Technically, the required return of an investment can be determined by determining the investments risk profile. However, many intangible factors influence an investor’s decision to invest. Discuss the intangible factors that may come into play in the investment decision process.1- explain what would you take to compare the worthness of two different fianancial investments? how would you choose which investment is amore attractive choice? 2- explain whether there are typically differences between the past performance and the future performance of a fianincial investment ? if not why not ?Is a method of screening out in certain situations an unacceptable investment alternative?
- When comparing the performance of two investment alternatives, which characteristicsof investments do you need to know? Please explain how you use those characteristics in making yourinvestment decision.Why should the financial manager include opportunity cost but ignore sunk costs when evaluating a proposed capital investments? Give an example of each.Explain Decision Rule for Nonsimple Investments?
- Which of the following is a disadvantage of the internal rate of return criterion? Select one: a. It is not a true rate of return. b. It uses an arbitrary benchmark cutoff rate. c. It ignores time value of money, cash flows, and market values. d. It cannot be used to rank independent projects. e. It may lead to incorrect decisions when comparing mutually exclusive investments.When different investment rules give conflicting answers, then decisions should be based on the Net Present Value rule, as it is the most reliable and accurate decision rule True FalseAn investment should be rejected if the IRR is Group of answer choices - equal to the required rate of return - greater than the accounting rate of return - less than the required rate of return - greater than the required rate of return
