Question
An investor considering a $300,000 equity investment in a new venture, has the alternative to invest in risk free 1-year US Treasury Bill at a
An investor considering a $300,000 equity investment in a new venture, has the alternative to invest in risk free 1-year US Treasury Bill at a 0.13%, or invest in a certificate of deposit for 3 years at a 1% annual percentage yield, or invest in an index fund tracking the S&P 500 which over the past 90 years has yielded about 10% (but over the short run could have much volatility).
Assuming the new venture is pitched as a moderate risk venture targeting to double the investment over three years, what is the minimum annual expected return the investor should consider in the new venture?
Pick the percentage that represent the minimum annual percentage yield the investor should expect given the pitch (assuming the pitch provides a reasonable target return for the venture's risk profile.) Hint: Do not pick the highest return of 100%
An investor considering a $300,000 equity investment in a new venture, has the alternative to invest in risk free 1-year US Treasury Bill at a 0.13%, or invest in a certificate of deposit for 3 years at a 1% annual percentage yield, or invest in an index fund tracking the S&P 500 which over the past 90 years has yielded about 10% (but over the short run could have much volatility). Assuming the new venture is pitched as a moderate risk venture targeting to double the investment over three years, what is the minimum annual expected return the investor should consider in the new venture? Pick the percentage that represent the minimum annual percentage yield the investor should expect given the pitch (assuming the pitch provides a reasonable target return for the venture's risk profile.) Hint: Do not pick the highest return of 100% 5% 10% 20% 50% 100% 200% An investor considering a $300,000 equity investment in a new venture, has the alternative to invest in risk free 1-year US Treasury Bill at a 0.13%, or invest in a certificate of deposit for 3 years at a 1% annual percentage yield, or invest in an index fund tracking the S&P 500 which over the past 90 years has yielded about 10% (but over the short run could have much volatility). Assuming the new venture is pitched as a moderate risk venture targeting to double the investment over three years, what is the minimum annual expected return the investor should consider in the new venture? Pick the percentage that represent the minimum annual percentage yield the investor should expect given the pitch (assuming the pitch provides a reasonable target return for the venture's risk profile.) Hint: Do not pick the highest return of 100% 5% 10% 20% 50% 100% 200%Step by Step Solution
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