What does a failed net-investment test indicate?

Q: What are the implications of the weak‐form, semi-strong-form, and strong-form of the EMH for…

A: The Efficient Market Hypothesis (EMH) describes a stock market that is both operationally and…

Q: Which is the accounting rate of return using the average investment?

A: Summary of the relevant information as provided in the question : cost of investment =    £…

Q: Does the accounting (book) rate of return (ARR) method provide a valid (or, meaningful) measureof…

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Q: How do the Internal-Rate-of-Return Criterion relate to the PW Analysis?

A: Capital budgeting:   It is the process in which the business uses to determine which proposed fixed…

Q: What is a satisfiable investment? When the present value of benefits surpasses the cost of an…

A: This question explains about the present value of benefits surpasses and the cost of an investment…

Q: What advantage does the Sharpe Ratio

A: Sharpe ratio is also known as Sharpes measure or reward to volatility ratio. It is the ratio…

Q: Apply the procedure to find the true IRR, or return on invested capital, of the mixed investment?

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: What is a satisfactory investment? When the present value of benefits exceeds the cost of an…

A: Satisfactory investment refers to an investment  wherein the present value of benefits after…

Q: Is a method of screening out in certain situations an unacceptable investment alternative?

A: Capital budgeting is the technique that is used in business to determine the best investment…

Q: What are the shortcomings of the internal rate of return criterion?

A: Solution- Internal Rate of Return (IRR)-      The Internal Rate of return (IRR) is that the discount…

Q: Which one of the following is an example of conventional form of investment?

A: Conventional investment categories includes trading investment options.

Q: why is a need for investor to evaluate the investment ?

A: All investments will have a certain percentage of risk. To control the future risks in the…

Q: Which of the following methods does not consider the investment’s profitability? a. ARR b. Payback…

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Q: Which is risk in the context of financial decision making and performance? Does performance…

A: Risk in the perspective of financial decision making and performance differs as the company faces…

Q: What is the significance of finding the internal rate of return?

A: IRR helps to check the viability of the project. If IRR is more than Kc than Project seems to be…

Q: What is meant by the term abnormal rate of return?

A: Abnormal rate of return is return earned above or below the normal rate of return.

Q: Which of the following should not be included as an application of the rate of return concept? rate…

A: As per the guidelines, only one question is allowed to be answered so, I am answering question no.…

Q: What is the return on investment (ROI)?

A: Introduction: An investment is the acquisition of an asset or object with the intention of earning…

Q: What is the difference between the possible returns and the expected return?

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Q: Does the IRR measure ignore the scale of investment?

A: The internal rate of return (IRR) is a capital budgeting metric used to gauge the benefit of…

Q: How behavorial bias affect investment behavior?

A: Behavioral bias is the belief by the investors that unknowingly affects the investors investment…

Q: Why should the financial manager include opportunity cost but ignore sunk costs when evaluating a…

A: Capital investment is defined as an amount, which used to get invested in the corporation for…

Q: Basic Elements of Risk-Adjusted Returns?

A: Introduction: Risk adjusted return is a methodology for calculating and evaluating the returns on an…

Q: What are the principal objections to the use of the average rate of return method in evaluating…

A: Average rate of return: Under this method, the average net income is used in evaluating the capital…

Q: What kind of investment is considered to be risk-free?

A: A risk-free investment is an investment that has a minimum or no fluctuation from the expected…

Q: Why are rates of return superior to dollar returns when comparingdifferent potential investments?

A: A rate of return (ROR) refers to the net income or loss of an investment over a given timeframe as a…

Q: Illustrate the method of investment risk: Investment?

A: Following are the methods of investment risk: Investment: Standard deviation: Standard deviation…

Q: Explain the difference between return of investment versus return on investment.

A: The ratio analysis helps to analyze the financial statements of the business.

Q: How does the application of the standard deviation differ from the application of the coefficient of…

A: a. Standard Deviation: The average fluctuation of a variable around the mean is known as standard…

Q: What are some limitations of financial performance measures?

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Q: Present the internal rate of return criterion and its strengths and weaknesses.

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: How does the risk return trade-off relate to the financial manager's main goal?

A: The main goal for a financial manager is to generate the maximum value of the firm to its owners.…

Q: what is the difference between a required rate of return and an expected rate of return?

A: Rate of return (ROR) is a value at which an investor earns additional amount on invested amount…

Q: 1. Define the components of holding period return. Can any of these components be negative? 2. How…

A: Hello. Since your question has multiple parts, we will solve the first question for you. If you want…

Q: biases seriously affect investor's analysis and investment decisions? How

A: Behavioural biases are nothing but irrational behaviour or beliefs that can subconsciously affect…

Q: How do we use the computed figure when evaluating an investment alternative?

A: There are various computations available for evaluation of investment alternatives.  The rate of…

Q: are return on investment, residual income, and EVA qualitative components?

A: Qualitative components refer to the intangible effect of the events and transactions of business…

Q: What is return on investment?

A: Return on investment  is a financial ratio which is measured as net income divided by the cost of…

Q: Define the term Mean and Variance of an Investment Opportunity?

A: In terms of investment, mean is the average of all the sources of capital contributed with regard to…

Q: What does “investment risk” mean?

A: Risk is referred as uncertainty or loss. Financial risk is referred as the variability of actual…

Q: Is the accounting rate of return (ARR) the same thing as the return on investment (ROI)?

A: Yes, Accounting rate of return (ARR) the same thing as the Return on investment (ROI). The…

Classification Of Risk

Risk means when there could be a possibility that the returns expected from a particular project or investment may or may not match the investor's expectations. In other words, the uncertainty of an income arising from a source that would either be lower than expected or result in losses in risk exposure of the project. The higher the risk involved, the higher is the return expected by the investor as the investor is exposed to a high level of risk. There are various methods by which different types of risk can be assessed and avoided or mitigated.