QUESTION 2 The effective interest rate per month at the Bank of Port Royal is 0.019. The effective interest rate per year at the Bank of Shipwreck Cove is 0.330. Captain Jack Sparrow needs to accumulate money in order to buy a new ship . He makes payments of 2.200 at the beginning of each month for 17 months into his account at the Bank of Port Royal. At the end of each month, the interest credited by the Bank of Port Royal is immediately transferred into Jack Sparrow's account at the Bank of Shipwreck Cove. Calculate the total amount ( in both banks ) at the end of 17 months.
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.
QUESTION 2
The effective interest rate per month at the Bank of Port Royal is 0.019. The effective interest rate per year at the Bank of Shipwreck Cove is 0.330. Captain Jack Sparrow needs to accumulate money in order to buy a new ship . He makes payments of 2.200 at the beginning of each month for 17 months into his account at the Bank of Port Royal. At the end of each month, the interest credited by the Bank of Port Royal is immediately transferred into Jack Sparrow's account at the Bank of Shipwreck Cove. Calculate the total amount ( in both banks ) at the end of 17 months.
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