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It is the lowest return on project or investment that will make the firm or investor to accept that project.
What else can I help you with?
What is investor's required rate of return?
An investor's required rate of return is the minimum return that an investor expects to achieve from an investment, considering its risk level. It serves as a benchmark for evaluating the attractiveness of an investment compared to alternative options. This rate often incorporates factors such as the risk-free rate, the investment's risk premium, and market conditions. Investors use it to determine whether the potential returns justify the risks involved.
Are interest rate and rate of return the same?
Yes, the interest rate and rate of return are exactly the same.
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 minimum lending rate?
Minimum lending rate is the rate officially charged by the Bank which will refrain from lending money. It is also referred as the discount rate in American English.
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?
Expected return= risk free rate + Risk premium = 11 rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)
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.
When a corporation weighs its return on investment for initiating a new project against the minimum standard investment return it has set before it the minimum standard investment return is referred t?
Hurdle rate
What is minimum attractive rate of return?
It is the lowest return on project or investment that will make the firm or investor to accept that project.
What are two other terms that are used interchangeably with the term 'cost of capital'?
Two terms often used interchangeably with 'cost of capital' are 'required return' and 'hurdle rate.' The required return refers to the minimum return an investor expects to earn for taking on the risk of an investment. The hurdle rate is the minimum acceptable return rate that a project must achieve to be considered worthwhile.
What is the cut off point for accounting?
Businesses attempt to estimate the possible income received by certain transactions. They then compare this amount to the necessary rate of return on the investment. Every investment has a necessary return (usually enough so the company doesn't lose money in the investment). The cutoff point, therefore, is the minimum rate of return. If a company invests in something with a projected 15% rate of return, but the minimum rate of return is 20%, then the company is better off not investing.
How can I get better in money market checking?
Many money market accounts have a minimum dollar amount to achieve a minimum rate of return. The maximum rate of return will differ from site to site but should be clearly explained in the application process. Read the application carefully.
How do you calculate minimum Required Rate of Return?
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.
The cost of equity and the required rate of return are equal to what?
The cost of equity is the return that investors expect for holding a company's equity, reflecting the risk of the investment. The required rate of return is the minimum return an investor expects to earn from an investment, compensating for its risk. In essence, the cost of equity and the required rate of return are equal as they both represent the expected return that justifies the risk taken by investors in equity securities.
How would you describe the cost of capital?
The minimum rate of return the company must earn to be willing to make the investment. It is the rate of return the company could earn if, rather than making the capital investment, it invested the money in an alternative, but comparable, investment.
Where are the highestrates for CD / what bank?
Discover Bank currently offers a return of 3.7% on a minimum $2,500 investment for a 5-year CD rate.
What is investor's required rate of return?
An investor's required rate of return is the minimum return that an investor expects to achieve from an investment, considering its risk level. It serves as a benchmark for evaluating the attractiveness of an investment compared to alternative options. This rate often incorporates factors such as the risk-free rate, the investment's risk premium, and market conditions. Investors use it to determine whether the potential returns justify the risks involved.
How is expected rate of return calculated from average rate of return on investment and standard deviation?
The expected rate of return is simply the average rate of return. The standard deviation does not directly affect the expected rate of return, only the reliability of that estimate.
