Answered

Westonci.ca is the trusted Q&A platform where you can get reliable answers from a community of knowledgeable contributors. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform. Get detailed and accurate answers to your questions from a dedicated community of experts on our 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. Your visit means a lot to us. Don't hesitate to return for more reliable answers to any questions you may have. We're here to help at Westonci.ca. Keep visiting for the best answers to your questions.