Following is the rate-of-return component information for First Venture investors: Rate Return Component Component Liquidity Premium ....
Question:
Following is the rate-of-return component information for First Venture investors:
Rate Return
Component Component
Liquidity Premium ……………………….... 5%
Risk-free Rate …………………………….. 6
Advisory Premium ………………….....….. 9
Market Risk Premium …………....…….... 11.5
Hubris Projection Premium …..........…... 40
A. Calculate the expected rate of return before considering premiums for illiquidity, advisory activities, and hubris projections.
B. Estimate the hubris projections premium for this First Venture investment.
Step by Step Answer:
Entrepreneurial Finance
ISBN: 978-1305968356
6th edition
Authors: J. Chris Leach, Ronald W. Melicher