The expectations gap is

Q: What is par value?

A: Stockholders’ equity is the measure of assets staying in a business after the sum total of the…

Q: What is the carryover ratio? What parameters of the base does its value depend on?

A: Carryover Ratio The purpose of measuring the carryover ratio  is to determine the ratio which are…

Q: Define the term cutoff values?

A: Cut-off values for diagnosis or screening examinations that have constant outcomes (estimated on a…

Q: Define beta risk

A: The portfolio beta is a measure of the portfolio’s volatility. It measures how the stock moves in…

Q: Briefly explain two measures that can be used in narrowing down the expectation gap

A: Ans. The audit expectation gap is defined as the difference between what the public expects from an…

Q: What are the shortcomings of the internal rate of return criterion?

A: Solution- Internal Rate of Return (IRR)-      The Internal Rate of return (IRR) is that the discount…

Q: Which are the more complex applications of rate-of-return techniques/

A: The question is based on the concept of rate of return and its application in finance

Q: Explain constant prepayment assumptions?

A: Prepayment refers to the settlement of debt before its actual due date. The model which determines…

Q: Explain pure expectations theory

A: It estimates the future interest without considering the maturity risk. According to the expectation…

Q: Which of the following is true about rates?

A: Total Rate of Return: The total rate is the real rate of return made on an investment over a period…

Q: Explain HPRs and Inflation?

A: Answer: Holding period returns (HPRs): Holding period return (HPR) is one of the investment…

Q: What is indifference curve?

A: Indifference curve: It is a diagram indicating a mix of two items that give equivalent fulfillment…

Q: What is meant by the term abnormal rate of return?

A: Abnormal rate of return is return earned above or below the normal rate of return.

Q: Briefly explain two measures which can be used in narrowing down the expectation gap

A: Expectation gap is the term which is defined as the gap among the users of assurance reports…

Q: Is an higher NPV better than a lower NPV and why?

A: The net present value is the difference between sums of the present value of cash inflows and…

Q: Whatis a yield curve?

A: It is the percentage of the securities at which the return is provided by the company to its…

Q: What is R, the expected

A: The time value of money is a method to calculate the present value and future value of an…

Q: Define average return

A: The formula to compute average return as follows:

Q: What is risk return ratio?

A: Any susceptibility a corporation or organization has to factors that might affect profitability or…

Q: three reasons for such expectation gap

A: Expectation Gap:-It is the difference between the public perception of an auditor's role and…

Q: standard deviation of returns?

A: Risk is the value of volatility around the mean. It is measured via variance or square root of…

Q: Describe the Internal-Rate-of-Return Criterion?

A: Internal rate of return (IRR) is defined as the rate of discount at which the NPV of human capital…

Q: impact the price of MYR?

A: MYR: MYR refers to the Malaysian Ringgit. It is the currency used in Malaysia. The value of 1 MYR is…

Q: What key assumption underlies the pure expectations theory?

A: Pure expectations theory in finance refers to the fact that the forward rates are nothing but the…

Q: What is the difference between YTD and YoY return? Provide an example

A: In the question they have asked regarding YTD and YOY differences between them so they will be…

Q: Explain Expectations Theory?

A: Expectations theory attempts to predict what short-term interest rates will be in the future based…

Q: What is the difference between positive and negative predictive value?

A: Positive predictive value is the probability that subjects with a positive screening test truly have…

Q: What is the discount factor?

A: Discount factor, also known as the conversion factor refers to the value which is used to calculate…

Q: What is net present value (NPV) method?

A: Capital budgeting can be defined as the decision making process employed by businesses wherein, a…

Q: What is disbursal rate

A: Disbursal rate is an important concept in the realm of financial markets and in the realm of fintech…

Q: What is the expected spot rate?

A: A spot rate is a price quoted for immediate settlement on an interest rate, commodity, security, or…

Q: Explain normal rate of return.

A: Rate of return: Rate of return is the return on investment. it might be a loss or profit on an…

Q: What is the geometric-gradient-series present-worth factor?

A: Present worth: It is the present value of future cash flows. The gradient is a change occurring in…

Q: Explain arithmetic mean returns?

A: Arithmetic mean:It is a commonly used measure of  mean (or measure of average). Arithmetic mean is…

Q: What is hurdle rate?

A: Hurdle rate a rate usually used in capital budgeting decisions to calculate the acceptability of a…

Q: What is Modified Internal Rate of Return (MIRR) method?

A: Internal rate of return (IRR): The internal rate of return (IRR) is a measure utilized in capital…

Q: what is the risk-free rate (rf)?

A: Risk free rate is also called as treasury bill rate. This treasury bill rates are free from default…

Q: What is the Variance of returns for Security XYZ?

A: Outcome Probability Return A 20% 20% B 80% 25%   Expected return = (Probability of…

Q: Find the internal rate of return

A: Internal Rate of Return is the rate at which Present value of cash inflow is equal to present value…

Q: What is the difference between smart beta ETFS and index ETFS?

A: Smart beta exchange traded funds (ETFS) is a systematic approach which gives the advantage of active…

Q: What is Net Present Value (NPV)?

A: Time value of money: Time value of money refers to the concept that the value of money available at…

Q: Another term for return is ..................

A: Return means money which is earned or lost in the process of investment. Return  can be in the form…

Liquidity Risk Exposure

Answer: c