Following is the rate-of-return component information for FirstVenture investors: RATE COMPONENT RETURN COMPONENT Liquidity premium ......... 5.5%
Question:
RATE COMPONENT RETURN
COMPONENT
Liquidity premium ......... 5.5%
Risk-free rate ........... 6%
Advisory premium ......... 9%
Investment risk premium ...... 11.5%
Target rate of return ........ 40%
A. Calculate the expected rate of return before considering premiums for illiquidity, advisory activities, and hubris projections.
B. Estimate the hubris projections premium for this FirstVenture investment.
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Related Book For
Entrepreneurial Finance
ISBN: 978-0538478151
4th edition
Authors: J . chris leach, Ronald w. melicher
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