Calculate the expected rate of return

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Reference no: EM131954172

1. Define an annuity and discuss why an annuity is so important when buying a car, buying a home or in a retirement plan, especially in the life of people that are not economically wealthy?

2. Calculate the expected rate of return (ER) for the following: Po= purchase price = $62 P1= expected selling price = $77 I = Income = $7 What is the percentage of Expected Return? Round the answer to two decimal places in percentage form.

3. The probability distribution of a less risky expected return is more peaked than that of a riskier return. What shape would the probability distribution be for (a) completely certain returns and (b) completely uncertain returns?

Reference no: EM131954172

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