Effective rate of return?
The nominal rate of return adjusted for more frequent calculations (compounding) than once per annum.
effective interest rate the true rate of return considering all relevant financing expenses . Example: Abel borrows $10,000 on a one-year bank loan. He pays 2 discount points and a 7% face interest rate . He repays the loan at the end of the year, with interest. Since he really received only $9,800 at the start of the loan and repaid $10,700, the effective rate was greater than 7%. It was approximately 9.2%.
How is expected rate of return calculated from average rate of return on investment and standard deviation?
Risk free rate is 5 and the market risk premium is 6 What is the expected return for the overall stock market What is the required rate of return on a stock that has a beta of 1.2?
A borrower is often confrented with a stated interest rate and an effective interest rate What is the difference and which one should a financial manager recognize as the true cost of borrowing?
Where Equals __ R Average rate of return Rt Return at time t T Number of time points Where Equals u Average rate of return Ri i-th return n Number of observations Where Equals __ R Average rate of return Rt Return at time t T Number of time points Where Equals u Average rate of return Ri i-th return n Number of observations
Internal rate of return (IRR) is a discounted method used for Capital budgeting decisions (investment etc) while accounting rate of retun is a measure for calculating return for a one off payment. IRR is actually the discount rate that equates the Present value of the cash flows to the NPV of the project (investment) while accounting rate of return just gives the actual rate of return. Habib firstname.lastname@example.org
The minimum Required Rate of Return should be calculated by looking at the rate of return that would be gained by putting money in a savings accounts that accrues interest at the current rate. If you investment is not projected to make more profit than that it does not meet the minimum Required Rate of Return.
If beta coefficient is 1.4 and the risk free rate is 4.25 and the market risk premium is 5.50 what is the required rate of return?
Money deposited in an interest bearing account has a rate of return. the institution will take that money and reinvest it so they can make money off of it as well. This rate of return on the internal investment is the internal rate of return, which is usually higher than that paid to the original investor.