The CAPM is used to calculate the amount of return that investors need to realize to compensate for a particular level of risk. It subtracts the risk-free rate from the expected rate and weighs it with a factor – beta – to get the risk premium. It then adds the risk premium to the...
Upon choosing the type of ELSS fund, the investor can invest either through a lump sum amount orSIPs. ELSS mutual funds are suitable for small investors as well, who wish to invest small and regular amounts to save tax. However, if an investor has a lump sum amount, they can also inve...
A financial model is anything that is used to calculate, forecast or estimate financial numbers. Models can therefore range from simple formulae to complex computer programs that may take hours to run. In short, financial models are mathematical models in which variables are linked together to rep...
You know that with asset X you will have to make an investment of $100 and will give you $200 with probability 0.2, $300 with probability 0.2, $500 with probability 0.6. Calculate the expected rate of return. If Var(r_X = 0.25 and Var(r_Y) = 0.16 and Cov(r_X, r_Y) = ...
While the Retire Early study uses the December 31st portfolio balance to calculate withdrawals, readers frequently ask, "What would happen if I retired right before the "Crash of 1929" rather than December 31st?" Replacing the December 1928 S&P500 value of 24.86 with the September 1929 value ...
How to calculate return on assets (ROA)? Explain what ROA measures.Total Assets:The total assets of a company are reported on the left-hand side of the balance sheet and they include current assets and fixed assets. Fixed assets are long-term assets that are further classified into tan...
To calculate |Ra(x, y)|, the cross-wavelet transform is used. On the other hand, the cross-wavelet power spectra segregate the domain relevant to the timeframe of data (Sharif et al., 2020). The definite sections of the time-frequency and the co-movement patterns are discovered through...
Explain how to calculate the price-earnings ratio and describe how it is used in analysis of a company's financial condition and performance. Compare and contrast how different types of financial instruments, such as stocks, bonds, mutual funds, and commodities, respond to diff...
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To calculate risk-reward ratio, take the expected return (reward) on the trade and divide by the amount ofcapitalrisked. Do investments with higher risks yield better returns? Not necessarily. The appropriate risk-return tradeoff depends on a variety of factors, including an investor’s risk tol...