Opportunity to invest in a well-diversified portfolio

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Reference no: EM131999107

1. You won the lottery today and deposited $10,000 into an interest bearing account. The account will earn you 7% interest. What will the account be worth after 8 years?

2. You are given the opportunity to invest in a well-diversified portfolio with expected return of 12% and beta of 1.5. The risk-free rate is 2% and the market risk premium is 8%. Should you invest?

3. Your friend Evan wants to open up a donut shop. Based on his numbers, he says he can pay you back $20,000 after 5 years. How much should you loan him now if you want to earn 7% interest on your loan?

Reference no: EM131999107

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