Compute the investor required rate of return

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Problem 1: Calculate the cost of following trade credit terms, where payment is made on the net due date.

(a) 3/25, net 35

(b) 3/15, net 30

(c) 2/15, net 25

(d) 2/10, net 30

Problem 2: XYZ Ltd is considering an investment in one of two shares. Given the information that follows, which investment is better, best on risk (as measured by the standard deviation) and return?

SHARE A                                             SHARE B

PROBABILITY         RETURN           PROBABLY             RETURN

0.2                       -5%                      0.2                -2%

0.3                           6%                      0.3             16%

0.4                          25%                     0.4              20%

0.5                          15%

Problem 3: Compute the investor's required rate of return by using CAPM for Robotics Ltd ordinary shares, which have a 1.5 beta. The risk free-rate is 15% and the market portfolio (All ordinaries Index) has an expected return of 25%.

Problem 4: NYX Ltd bought an investment property last year for $750,000. This year the value of the property has gone up to $850,000. XYZ also received $85,000 in rental income for the year.

What is NYX's holding period return on the investment?

Reference no: EM132554392

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