What is the affect on return from inflation

Assignment Help Finance Basics
Reference no: EM13680201

Research and discuss the relationship between financial decision making and the risk and return tradeoff. As you research this, consider the five important relationships in the valuation of an asset. Consider expected rate of return, realized rate of return, and required rate of return in your research and discussions.

1. What is the affect on return from inflation? Interest rates? Length of time to maturity or holding period?

2. What does this risk-return tradeoff mean to the financial management of a firm? What are the possible impacts on the firm? How can this impact the firm's decisions?

3. Is this rule followed by most firms most of the time? If so, how? Give some examples. If not, why not? Give some examples.

4. Are there areas where this rule might not be applicable? If so, in what industries/firms/product life cycles might this be applied? If not, why not?

Reference no: EM13680201

Questions Cloud

The various dimensions of the organization : The various dimensions of the organization
Describe several workplace discrimination issues : Describe several workplace discrimination issues.
Which individual characteristics impact ethical beliefs : Which individual characteristics impact ethical beliefs, sensitivities, intentions, and behaviors? Describe Icek Ajzen's theory of planned behavior.
An organization chart clarifies authority relationships : An organization chart clarifies authority relationships
What is the affect on return from inflation : What is the affect on return from inflation?
Negligent driver leaves car in neutral : A car is parked on a cliff overlooking the ocean on an incline that makes an angle of 15.0° below the horizontal. The negligent driver leaves the car in neutral, and the emergency brakes are defective.
Calculate the variance of a portfolio with equal investments : Calculate the variance of a portfolio with equal investments
The position of a ball rolling in a straight line : The position of a ball rolling in a straight line is given by x=2.9 3.8t+5.2t2, where x is in meters and t in seconds. What is its instantaneous velocity at t= 2.0s and at t= 5.0s?
What is the annual level payment on the old debt : What is the annual level payment on the old debt?

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the most expensive car you could afford

You have saved $3,000 for a down payment on a new car. The largest monthly payment you can afford is $450. The loan would have a 11% APR based on end-of-month payments.

  Te risk-free rate is 6 and the market risk premium is 4

kelly tubes is considering a merger with reilly tires. reillys market-determined beta is 0.9 and the firm currently is

  Computation of future value of annuity and p/e ratio

Computation of future value of annuity and P/E ratio and what is the future value of an annuity is

  What is the opportunity cost of adding petite sizes

Assume the opportunity cost of capital is 8 percent. What is the opportunity cost of adding petite sizes?

  Is the dcf approach or the market multiple approach best

Is the DCF approach or the market multiple approach best for valuing a business? Are there conditions when one approach is preferred over the other?

  Use of debt in capital structure

Why might firms whose sales levels change drastically over time choose to use debt only sparingly in their capital structures?

  What is the stock current price

A stock is expected to pay a dividend of $0.75 at the end of the year. The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%. What is the stock's current price?

  How many polo shirts can zane purchase today

How many polo shirts can Zane purchase today?

  Compare the break-even points in units

Shock Electronics sells portable heaters for 25 dollar per unit, and the variable cost to produce them is $17. Mr. Amps estimates that the fixed expenses are $96,000.

  What is the maximum amount the firm should pay

Which investment should be considered? (for any credit, show your work). Use a 9.5% discount rate. Hint: A discount rate gives you the clue that you should perform a present value analysis on each investment.

  Use risk-neutral probabilities

The security's price will change (up or down) by 10% during the year, and the risk-free annual effective interest rate is 5%. The no-arbitrage price of the option is $100. Use risk-neutral probabilities to find the exercise price for the option.

  Finance based multiple choice questions

A coffee corporation has buying operations in New York, production facilities in three roasting plants scattered throughout the Midwest and marketing functions in Texas.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd