Create cash flow that has rate of return

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Reference no: EM132038015

1. What is the EAR if the APR is 6% and compounding is semi-annually? What is the EAR if it is compounded quarterly? What is the EAR if it is compounded weekly? Show your work.

2. Create a cash flow that has a rate of return at 10% and a rate of return at 20%. Plot the present worth of your cash flow to show the rates of return.

3. Portfolio managers Martin and Krueger each manage $5.0 million funds. Martin has perfect foresight, and the call option value of his perfect foresight is $250,000. Krueger is an imperfect forecaster and correctly predicts 38% of all bull markets and 79% of all bear markets. The value of Krueger's imperfect forecasting ability is __________.

$80,000

$121,250

$230,000

$42,500

Reference no: EM132038015

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