+1-415-670-9189
info@expertsmind.com
What is the discount rate
Course:- Financial Management
Reference No.:- EM13942921




Assignment Help
Assignment Help >> Financial Management

Henry, a direct descendant of Jefferson Morgan has inherited $450,000. A financial advisor tells her to invest this amount and target an average of at least 8% return over a 30 years. Henry decides to invest in a Northern Endowment Fund that has had a ten year average return of 8.5%. During the same time, S&P500 has had a 13% return (this is market return). The risk free return is 2% and the beta of the fund is 0.8.

a) What is the discount rate?

 

b) Would a beta of 1.1 increase her returns?




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Financial Management) Materials
Chocolate and more offers a bond with a coupon rate of 6 percent, semi-annual payments, and a yield to maturity of 7.73 percent. the bonds mature in 9 years. What is the marke
New Town Instruments is analyzing a proposed project. The company expects to sell 2,100 inits, + or - 4 percent. The expected variable cost per unit is $270 and the expected f
Development of financial institutions and effective medical technology are the only reasons Dr. Getzen gives as determinants of growth in the health care sector of the economy
Rockford Ltd plans to expand its successful business by establishing a subsidiary in France. Is there a better way to more precisely incorporate the country risk of concern he
Mama Italiano Sauce Production of jars sauce-$20,000 Ingredient cost (variable)-$16,000 Labor cost (variable)-$9,000 Rent (fixed)-$4,000 Depreciation (fixed)-$6,000 Other (fix
Jenson Computers has 850 computers that are no longer useful. The original cost was $600,000. The computers could be upgraded for $195,000 and sold for $728,000. Or, they coul
You have saved $3,000 for a down payment on a new car. The largest monthly payment you can afford is $450. The loan will have a 9% APR based on end-of-month payments. What is
What would an investor be willing to pay for, i.e. what is the present value of, common stock (is this significant to the question, why or why not?) in a firm that has no grow