Expected return the approximation

Assignment Help Finance Basics
Reference no: EM133111918

A useful rule of thumb to determine the time it takes your investment to double is to simply divide 72 by the expected return. For instance, if the annual expected return is 6%, the rule says that it will take 72/6=12 years for your investment to double. This is very close (but not exactly equal) to the actual time of 11.90 years it will take your initial investment to double. For which expected return value, the rule will hold exactly? That is, for which expected return the approximation given by the rule will be exactly equal to the time it will take your investment to double? Please express your answer as a percentage and use 3 decimals in your answer.

Reference no: EM133111918

Questions Cloud

Key features of common stock : Discuss the key features of common stock and key features of preferred stock.
Expected return on netflix : If the Beta of Netflix is 1.10 (Netflix = 1.10), the risk-free rate is 1%, and the expected return on the S&P is 8%, then if we use the S&P return as a proxy fo
Estimate a risk adjusted cost of capital : For for a particular project, discuss advantages and disadvantages of using the subjective approach to estimate a risk adjusted cost of capital
Maximise the value of the company : AAA is a medical company and must decide between two mutually exclusive projects for the final year of its life. The two projects have different levels of risk
Expected return the approximation : A useful rule of thumb to determine the time it takes your investment to double is to simply divide 72 by the expected return. For instance, if the annual expec
Calculate the npv of leasing : Calculate the NPV of leasing for LL and the minimum annual lease payment it will accept.
Explain the subscription price : DIY has 13,284 shares outstanding at $34.1 each. They expect to raise $156,151 by a rights offering. If the ex-rights stock price is $26, what must be the subsc
What will be the net book value of the machine at the end : The purchasing price was €1000 out of which Deprecia Inc. paid only €600, What will be the net book value of the machine at the end
Determine the largest deduction that john is entitled : John paid $455 for parking, ferry, and toll charges. Determine the largest deduction that John is entitled to

Reviews

Write a Review

Finance Basics Questions & Answers

  Describe the two ways whereby capital market securities pass

Describe the two ways whereby capital market securities pass from the issuer to the public.

  Compute current market value of the bonds

The Company has 1,000,000 of 8 percent bonds outstanding. Interest is payable each July and January 1 and the maturity date is ten years from today.

  Capital asset pricing? model-?breckenridge inc

?Breckenridge, Inc., has a beta of 0.96. If the expected market return is 11.0 percent and the? risk-free rate is 6.0 ?percent, what is the appropriate expected

  What did say to build rapport with them

Did you meet your primary or secondary sales goals? What did you do to qualify their needs? What did you say to build rapport with them

  How many more shares must you buy to be assured of earning

An election is being held to fill three seats on the board of directors of a firm in which you hold stock. The company has 8,200 shares outstanding.

  What is your portfolio return

During the year the three company's returns were - 7.6 percent, 21.4 percent, and 14.8 percent respectively. What is your portfolio return?

  Calculation of future value-annual value

The after tax cash flow of B&F Chemical Corp. - a plant producing fertilizers - is as follows:

  Should the trader go long or short futures

A trader takes a view that March KLSE CI futures which are currently trading at 1158.60 are about to enter a downtrend.

  Calculate the amount received from the currency option

Calculate the amount received from the currency option hedge (after considering the premium paid).

  What is business process re-engineering

What is business process re-engineering and when do companies inform their employees about their plans of re-engineering?

  What is nominal yield to maturity

A firm's bonds have a maturity of 14 years with a $1,000 face value, have an 8% semiannual coupon, are callable in 7 years at $1,062, and currently

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd