Answered

Westonci.ca is the best place to get answers to your questions, provided by a community of experienced and knowledgeable experts. Connect with a community of experts ready to help you find accurate solutions to your questions quickly and efficiently. Discover detailed answers to your questions from a wide network of experts on our comprehensive Q&A platform.

Given a real rate of interest of 3.2%, an expected inflation premium of 5.1%, and risk premiums for investments A and B of 7.4% and 8.9% respectively, find the following: a. The risk-free rate of return, rf b. The required returns for investments A and B

Sagot :

Parrain

Answer:

a. Risk-free rate of return:

= Real rate of return + Inflation premium

= 3.2% + 5.1%

= 8.3%

b. Required return for investment A:

= Risk free rate of return + Risk premium

= 8.3% + 7.4%

= 15.7%

Required return for investment B

= 8.3% + 8.9%

= 17.2%

Thank you for trusting us with your questions. We're here to help you find accurate answers quickly and efficiently. We appreciate your time. Please revisit us for more reliable answers to any questions you may have. Westonci.ca is committed to providing accurate answers. Come back soon for more trustworthy information.