Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Determinants of Required Rate of Return
1.Risk free rate - This is the interest rate such would exist on default free securities like Treasury bills and bonds.
Risk free rate is made up of two components like:
Therefore risk free rate (RF) = Real rate of return + Inflation premium.
If risk premium is added to risk free rate, necessary rate of return is derived. Hence required rate of return = real rate + inflation + premium + risk premium = Risk free rate + Risk premium.
2. Inflation premium - Investors are compensated for reduction in purchasing power of money. From point (1) the higher such the inflation premium, the higher the market interest rate.
3. Default risk premium (DRP) - This is the rate further added to risk free rate for possibility of default in such payment of loans. Generally, it's added if two securities have equal marketability and maturity.
4. Liquidity premium - This is premium that is added to equilibrium interest rate on a security if such type of security cannot be transformed to cash on short notice and close to the original cost.
5. Maturity Risk Premium - a premium reflecting interest rate risk that is risk of capital losses that investors are exposed to due to hanging interest rate over time.
Suppose the Alctz Display Flowers pte Ltd uses the periodic inventory system and average cost to explain inventory cost. (a) Determine the ending inventory cost as at Decembe
Agency Relationship between Government and the Shareholders Shareholders and via extension, the company they own operate within the environment requiring the charter or licens
Reasons for major Growth in Venture Capital Reasons for Significant Growth in the Developed Countries in Venture Capital i) Public attitude that is a favorable attitude
Stock Exchange Index or SEI Stock Exchange Index is a measure of relative changes in prices of stocks from one duration to another index. Nairobi Stock Exchange twenty (20) -
Commercial Bank for Short Term Loans Purpose Why Commercial Banks Prefer To Lend Short Term Loans a) Long-term forecasts are not only difficult although also vague as unc
Mr. de Ville, the owner of Tasman Ian de Ville Holdings Ltd. (TIDH) has asked you to evaluate five investment projects. TIDH has a $10,000,000 investment budget, an investment hurd
Turnover Ratios Turnover Ratios/efficiency/asset management ratio Turnover ratio shows the efficiency along with that the firm utilized the asset or resources at its dispos
Draw the network diagram of the following project according to the activity list and relationships mentioned below Table 1 Activity Du
Example of Capital Structure of a Company Example Company XYZ restricted has the given capital structure as: 10,000 Sh.10 ordinary shares 10,000
Enumerate about the Redemption Yield or Yield to Maturity (YTM) Redemption yield is indicated or promised rate of return an investor would receive from a bond purchased at t
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd