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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1. During this time of pandemic, many lending institutions offer a loan package to wage earners. Suppose loan company ABC offers you to borrow money amounting to PHP 50, 000 and payable in 4 years at a simple interest rate of 3% per annum, while loan company XYZ offers a 3% compounded annually. What loan company will you borrow money, then justify why you decide to choose to make loan with that particular loan company
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