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Calculate the expected rate of return before consider premim

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Reference no: EM131123708

Following is the rate-of-return component information for FirstVenture investors:
RATE COMPONENT RETURN
COMPONENT
Liquidity premium ......... 5.5%
Risk-free rate ........... 6%
Advisory premium ......... 9%
Investment risk premium ...... 11.5%
Target rate of return ........ 40%

A. Calculate the expected rate of return before considering premiums for illiquidity, advisory activities, and hubris projections.

B. Estimate the hubris projections premium for this FirstVenture investment. 

Reference no: EM131123708

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