+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
Walter Industries has $8 billion in sales and $2.8 billion in fixed assets. Currently, the company's fixed assets are operating at 90% of capacity. What is Walter's target fix
American jobs have been lost in major industries, such as the automobile, steel, textile, footwear, and consumer electronics, whereas jobs in the aircraft, computers, entertai
Calculate Company B’s weighted average cost of equity, given the following information: (a) Dividend: $2.50, (b) Growth Rate: 5.2% (c) Price: $35.20, (d) Debt: $33,000,000, (e
You bought a bond five years ago for $935 per bond. The bond is now selling for $980. It also paid $75 in interest per year, which you reinvested in the bond. Calculate the re
A company issues a ten-year bond at par with a coupon rate of 6% paid semi-annually. The YTM at the beginning of the third year of the bond (8 years left to maturity) is 7.8%.
The news has been full of stories lately about the stock market problems, sub-prime mortgages, and ponzi schemes. All of these required people to make decisions. Research one
what is the required return using the capital asset pricing model if a stock's beta is 1.2 and the individual, who expects the market to rise by 11.2%, can earn 4.4% invested
You own a 5-year bond with a face value of $1,000 and a coupon rate of 10 percent with annual payments. The bond is currently worth $1,216.47. If market interest rates remain