Expected rate of return but lower sigma

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Reference no: EM131897886

1. You borrowed $10,000 to buy a new car. The loan was a 6 year loan at 6%. The monthly payment was $165.73 and in the first 36 months you paid $1,413.91 in interest. After 3 years you decide to take a 4 year used car loan at 2.5%. How much will your monthly payment go down?

2. You are considering buying Coca Cola or IBM. IBM has an expected rate of return of 18% and a sigma of 16%. Coca Cola has a 14% expected rate of return but a lower sigma of 10%. Which stock should you choose and why?

Reference no: EM131897886

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