FINANCIAL MARKETS+INST.-(LL)W/ACCESS
FINANCIAL MARKETS+INST.-(LL)W/ACCESS
7th Edition
ISBN: 9781265567880
Author: SAUNDERS
Publisher: MCG CUSTOM
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Chapter 3, Problem 1DYU
Summary Introduction

To discuss: The Difference among expected rate of return and required rate of return

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Explanation of Solution

Expected rate of return refers to the rate at which the firm expects from its investment

For example, Person X invests $100,000 in bond A and he expects the return at the rate of 6%.

Required rate of return refers to the minimum rate at which the company earns from its investment. For example Person X invests $150,000 in bond B at 5% interest, here the minimum rate of return is 5%.

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Internal Rate of Return (IRR); Author: The Finance Storyteller;https://www.youtube.com/watch?v=aS8XHZ6NM3U;License: Standard Youtube License