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8. You invest $8,000 today and leve it invested for 7 years. If you earn a rate of 5%, how much can you withdraw in
| 8. You invest $8,000 today and leve it invested for 7 years. If you earn a rate of 5%, how much can you withdraw in 7 years? | |||||
| Invest | $8,000 | for | 7 | years | |
| Interest rate | 5% | ||||
| Withdraw in 7 years? | |||||
| 9. You want to buy a car for $30,000 today. You come up with a down payment of $4,000 and will borrow the rest from a bank in an amortized loan. | |||||
| What would be your MONTHLY payments given an annual interest rate of 4% and a loan for 5 years? | |||||
| Buy car for | $30,000 | Down payment | $4,000 | Borrow | |
| Interest rate | 4% | per year | Rate per month | ||
| Number of years | 5 | Number of months | |||
| Payment? | |||||
| 10. You borrow at a rate of 7% per year, compounded monthly. What is the effective rate? | |||||
| Rate (nominal) | 7% | compounded | 12 | times a year | |
| Effective rate? | |||||
| 11. You are using the Capital Asset Pricing Model (CAPM) to estimate required returns. | |||||
| The risk free rate is 2.5% and the market risk premium is 6.5%. a. What are the required rates on the following stocks? | |||||
| risk free rate | 2.50% | Market risk premium | 6.50% | ||
| Company | beta | required rate | |||
| McDonalds | 0.65 | ||||
| Delta | 1.45 | ||||
| Apple | 1.28 | ||||
| risk free rate | 0 | ||||
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Chains Of Finance How Investment Management Is Shaped
Authors: Diane-Laure Arjalies, Philip Grant, Iain Hardie, Donald MacKenzie, Ekaterina Svetlova
1st Edition
0198802943, 978-0198802945
