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What is the rate of return required by investors in the market for owning a bond called?
YTM
Does the capital asset pricing model help us to get required rate of return or expected rate of return?
expected rate of return
Why do bond investors have lower required rates of return than do stock investors?
They take less risk, theoretically, so they have lower expectations.
Relationship btwn an investor's required rate of return and value of security?
Relationship btwn an investor's required rate of return and value pf security
What is the relationship between bond value and its required rate of return?
The value of a bond is inversely related to its required rate of return. When the required rate of return increases, the present value of the bond's future cash flows decreases, leading to a lower bond price. Conversely, if the required rate of return decreases, the bond's present value increases, resulting in a higher bond price. This relationship highlights how market interest rates and bond prices move in opposite directions.
Relationship between required rate of return and coupon rate on the value of a bond?
required rate of return is the 'interest' that investors expect from an investment project. coupon rate is the interest that investors receive periodically as a reward from investing in a bond
What is the rate of return required by investors in the market for owning a bond called?
YTM
What are the three basic factors that influence the required rate of return for an investor?
The three basic factors that influence the required rate of return for an investor are the risk-free rate of return, the expected return from the investment, and the risk premium associated with the investment. Investors typically demand a higher rate of return for riskier investments.
If Cabell Corp bonds pay an annual coupon rate of 10 percent and the investors required rate of return is now 8 percent on these bonds what will be the price?
par value
How does a change in the required rate of return affect project's Internal Rate Of Return?
A change in the required rate of return will affect a project's Internal Rate of Return (IRR) by potentially shifting the project's feasibility. If the required rate of return increases, the project's IRR needs to be higher to be considered acceptable. Conversely, a decrease in the required rate of return could make the project's IRR more attractive.
Dividend of 1.00 If the expected long-run growth rate for this stock is 5.4 percent and if investors' required rate of return is 13.9 percent what is the stock price?
11.04 12.40 13.76 15.00 9.42
Increase in expected growth rate does what to required return rate?
An increase in a firm's expected growth rate would normally cause its required rate of return to
What is the nominal annual rate of return?
The nominal annual rate of return is calculated from the effective interest rate. It is typically a slightly lower percentage, and gives investors an idea of what their investment may return.
Explain why a characteristic of an efficient market is that investments in that market have zero NPVs?
On average, the only return that is earned is the required return-investors buy assets with returns in excess of the required return (positive NPV), bidding up the price and thus causing the return to fall to the required return (zero NPV); investors sell assets with returns less than the required return (negative NPV), driving the price lower and thus the causing the return to rise to the required return (zero NPV).
Does the capital asset pricing model help us to get required rate of return or expected rate of return?
expected rate of return
What is the difference between the required rate of return and the expected rate of return in investment analysis?
The required rate of return is the minimum return an investor needs to justify the risk of an investment, while the expected rate of return is the return that an investor anticipates receiving based on their analysis of the investment's potential performance.
How does the cost of debt differ from the required rate of return for bondholders?
Question 4 How does the cost of debt differ from the required rate of return for bondholders?
