-is a series of equal payments made or 4. In the context of finance, a(n) receiv
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-is a series of equal payments made or 4. In the context of finance, a(n) received in equal intervals for a specified number of periods. _ a. Annuity b. Mortgage c. Lump sum d. Perpetuity 5. Van Hohen purchased 500 shares of Homunculus Inc. stock at $15.10 per share on 1/1/2018. He sold the shares on 12/31/2018 for $16.50. Homunculus stock has a beta of 2.4. The current risk-free rate of return is 2.4%, and the market risk premium is 4.8%. Based on the CAPM, what is the required return on Homunculus Inc. stock? a. 15.28% b. 13.92%. C. 11.23%. d. 9.77%. 6. Which of the following are issues addressed by the study of finance? I. Capital budgeting decisions II. Capital structure decisions III. Working capital management decisions 7. Alphonse wants to have $10,000 in his savings account after four years. The account pays a fixed interest rte of 6%. If the account is compounded monthly, how many periods should be drawn on the timeline of cash flows? a. 48 b. 24 c. 12 d. 4Explanation / Answer
4. Mortgage is paid/received at a equal amount for every period specified.
5. As per CAPM, Re = Risk free rate + Risk Premium * Beta.
So Re = 2.4 + 4.8 * 2.4 = 13.92 %
6. All the above are part of finance, All this are used for decision making purpouse.
7. Since the interest is to be compounde monthly and the time is 4 years, so it means that the cashflow will be compunded every month for 4 years that is why the the period will be 12 months * 4 years which is 48 installments
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