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Calculate the expected rate of return before considering

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Reference no: EM13576356

Expected Rate of Return and Hubris Premiums-Following is the rate-of-return component information for First Venture investors:

 

RETURN

RATE COMPONENT

COMPONENT

Liquidity premium

5.5%

Risk-free rate

6%

Advisory premium

9%

Investment risk premium

11.5%

Target rate of return

40%

A. Calculate the expected rate of return before considering premiums for illiquidity, advisory activities, and hubris projections.

B. Estimate the hubris projections premium for this First Venture investment.

Reference no: EM13576356

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