What is the difference between assets expected return and its actual return? Why are expected returns so important to investors and managers?
Answer to relevant QuestionsIf prices move almost at random, then why should we place any value on the CAPM, which makes predictions about expected asset returns? Why is the standard deviation of a portfolio typically less than the weighted average of the standard deviations of the assets in the portfolio, while a portfolios beta equals the weighted average of the betas of the stocks ...What important flaw do both the IRR and PI share? Explain. Why is it important for the financial analyst to: (a) Focus on incremental cash flows, (b) Ignore financing costs, (c) Consider taxes, and (d) Adjust for noncash expenses when estimating projects relevant cash flows? A real estate development firm owns a fully leased forty-story office building. A tenant recently moved its offices out of two stories of the building, leaving the space temporarily vacant. If the real estate firm considers ...
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