Questions from General Investment

Q: Define the following terms and explain how they are used to find

Define the following terms and explain how they are used to find the risk-free rate of return and the required rate of return for a given investment. a. Real rate of return b. Expected inflation premi...

Q: What is meant by the holding period, and why is it

What is meant by the holding period, and why is it advisable to use holding periods of equal length when comparing alternative investments? Define the holding period return, and explain for what lengt...

Q: Define internal rate of return. When is it appropriate to use

Define internal rate of return. When is it appropriate to use IRR rather than the HPR to measure the return on an investment?

Q: Explain why you must earn 10% on all income received from

Explain why you must earn 10% on all income received from an investment during its holding period in order for its IRR actually to equal the 10% value you’ve calculated.

Q: Explain how either the present value (of benefits versus cost)

Explain how either the present value (of benefits versus cost) or the IRR measure can be used to find a satisfactory investment. Given the following data, indicate which, if any, of these investments...

Q: What are LEAPS? Why would an investor want to use a

What are LEAPS? Why would an investor want to use a LEAPS option rather than a regular listed option?

Q: On January 1, 2017, Dave Coates, a 23-

On January 1, 2017, Dave Coates, a 23-year-old mathematics teacher at Xavier High School, received a tax refund of $1,100. Because Dave didn’t need this money for his current living...

Q: Define risk. Explain what we mean by the risk-return

Define risk. Explain what we mean by the risk-return tradeoff. What happens to the required return as risk increases? Explain.

Q: What is the time value of money? Explain why an investor

What is the time value of money? Explain why an investor should be able to earn a positive return.

Q: Describe the confidence index, and note the feature that makes it

Describe the confidence index, and note the feature that makes it unique.