SOLUTION: The rate of return of certain investments increases as the risk factor of the investment increases. An investment with a risk factor of 2 has a rate of return of 5.0%. An investmen
Algebra.Com
Question 827084: The rate of return of certain investments increases as the risk factor of the investment increases. An investment with a risk factor of 2 has a rate of return of 5.0%. An investment with a risk factor of 15 has a rate of return of 14.0%. What is the average rate of return per unit of risk? Round to the nearest hundredth if necessary.
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
The rate of return of certain investments increases as the risk factor of the investment increases.
---------------------
"An investment with a risk factor of 2 has a rate of return of 5.0%
-------
An investment with a risk factor of 15 has a rate of return of 14.0%.
--------
You have 2 points relating rf and rr:: (2,0.05) and (15,0.14)
---------------
What is the average rate of return per unit of risk? Round to the nearest hundredth if necessary.
---------
average = (0.14-0.05)/(15-2) = 0.09/13 = 0.0069
================================================
Cheers,
Stan H.
====================
RELATED QUESTIONS
Formulate a system of equations for the situation below and solve.
A private investment... (answered by Theo,MathTherapy)
Formulate a system of equations for the situation below and solve.
A private investment... (answered by mananth,MathTherapy)
A private investment club has $500,000 earmarked for investment in stocks. To arrive at... (answered by Theo)
Formulate a system of equations for the situation below and solve.
A private... (answered by richwmiller)
Formulate a system of equations for the situation below and solve.
A private... (answered by greenestamps)
An investment broker has given $250,000 to invest in a 12-month commitment. The money can (answered by lynnlo)
An investment banker received a bonus and invested that money in two investments. He put... (answered by solver91311)
Formulate but do not solve the problem.
The management of a private investment club... (answered by Glaviolette,MathTherapy)
An investor has up to N$450,000 to invest in three types of investments. Type A pays 6%... (answered by ikleyn)