Difference in expected rates of return

Reference no: EM132698381

The difference in the expected rates of return can be attributed to the two investments and might arise due to valuation and risk. It might happen that the risk of both investments is different, the second investment is risky and hence to compensate, it has to offer a questionable premium.

An investment like this is expected to pay a higher interest rate while a relatively less risky investment is expected to pay a lower interest rate. It might happen that both investments is same, but the market has priced it incorrectly thus lowering the price and increasing the return.

Reference no: EM132698381

Questions Cloud

Christian worldview could impact starbuck mission : Create an analysis of how a Christian worldview could impact Starbuck's Mission and Vision statements and its business practices.

Describe how would go about analyzing target population : Describe How would go about analyzing target population? What types of resources could you use? Select and identify a target population.

How would categorize business orientation of united airlines : If you were the top executive at United Airline, would have authorized a study to identify proper employee incentive structure prior to making an announcement

What is smith ltds break-even point : Smith Ltd sells a product for $100 per unit; its variable costs are $70 per unit and its total fixed costs are $90,000. What is Smith Ltd's break-even point

Difference in expected rates of return : The difference in the expected rates of return can be attributed to the two investments and might arise due to valuation and risk.

Create a campaign for company to launch : Create a campaign for your company to launch(Paytabs), starting January 2021 till December, that will be active for 12 months.

Disaster plans-types of items community hospital : List and explain the types of items a community hospital will require and seek from the SNS in the event of a disaster.

How do determine which pricing strategy is represented : How do determine which pricing strategy is represented by your brand's price and discuss why (or why not) the pricing strategy is effective.

What is net balance that will be reported in the December : Related to the transferred equipment, what is the net balance that will be reported in the December 31, 2013 consolidated balance sheet

User Account

All Pages