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

Q: Define actuarial rate of return

A: Definition: Actuarial rate of return is the expected value of losses of an insurance company that…

Q: Under what conditions is a market-based transfer price most likely to be used?

A: Transfer Pricing: It is termed as the cost which is charged by the one department of the company…

Q: What is the incremental analysis?

A:

Q: Why is partitioning an internal rate of return important?

A: Introduction: There are two cash flow components which can form the portioning of internal rate of…

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: Explain constant prepayment assumptions?

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

Q: Explain the benefits of supply-chain analysis.

A: In supply chain analysis, every stage of a supply chain that includes the purchase of raw material,…

Q: Explain pure expectations theory

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

Q: Briefly explain the fundamental trade-off between risk and return.

A: Fundamental trade-off among risk and return: Higher risk is related with larger chance of advanced…

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: Define the term predictive value.

A: Predictive value refers to the fact that quality financial information can be used to base…

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: Why do most of the engineers prefer Rate of Return Analysis to the PW method?

A: Answer: They would be calculating the present worth of cash flows using a net present value…

Q: find The internal rate of return (IRR) for this case in exceland equation.

A: Internal rate of return(IRR) is the rate at which the the initial cost of project is equal to…

Q: Describe the strengths and weakness of payback method.

A: Definition:   Payback method: Payback method refers to the method which measures the time period…

Q: What are the different liquidity tools?

A: Liquid assets are those assets which are either in cash form or can be converted into cash into…

Q: What is the difference between the possible returns and the expected return?

A:

Q: What is the Internal-Rate-of-Return Criterion?

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

Q: How can we obtain an equal-payment series equivalent to the gradient series?

A: The question is based on the concept of gradient series of payments, which is used in equivalent…

Q: Which different terms are used to refer to rate of return?

A: Rate of return is the return that is expected by the investors from the investment made. It is…

Q: What is meant by partitioning the internal rate of return? Why is this procedure meaningful?

A: Internal rate of return is defined as the annual rate of earnings on an investment and unlike income…

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: / Risk and Return

A: There are 3 things given in the question and asked for an explanation of only 1. Risk and Return…

Q: Explain four aspects of rate-of-return analysis?

A: The return of return is the return on investment made when the time value cashflows turns to net…

Q: Explain CMO Price Behavior and Prepayment Rates?

A: The question is based on the concept of Collateralized Mortgage Obligations (CMO) , interest rate…

Q: What formula to use to find Payback Period and NPV? (in Excel)

A: NPV or Net Present Value is the present value of all net cash cashflow on a provided discount rate.…

Q: Define real rate of return.

A: Real Rate of Return is defined as the rate that has been adjusted for rise in prices of commodities.…

Q: Present the internal rate of return criterion and its strengths and weaknesses.

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

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: Distinguish between simple and nonsimple investment with examples?

A: A simple investmentUnder it, there is negative initial cash flow and in the series of net cash flow,…

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: Explain an example of net realizable value.

A: Net realizable value:   Net realizable value is the net amount of receivables which a business…

Q: Explain arithmetic mean returns?

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

Q: Elements of required return - establish a MARR? Explain how/

A: Introduction: A capital investment to be appealing should have a return which goes beyond the…

Q: What is hurdle rate?

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

Q: Briefly explain the problems associated with the payback method.

A: Capital budgeting is referred as the process of decision making which is used by companies to…

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: Which of the following defines iterative calculation?

A: SPREADSHEET

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: Explain the term single rate method.

A:

Q: What are the four aspects of rate-of-return analysis?

A: Rate of return analysis tells the rate of return which a investment can give. It carefully analyse…

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.