Capital investment decisions often involve all of the following: qualitative factors or considerations, large amounts of money, and risk. True / False
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Capital investment decisions often involve all of the following: qualitative factors or considerations, large amounts of money, and risk.
True / False
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- Give an example of a liquid investment and an illiquid investment. Discuss why you consider each of them to be liquid or illiquid.Discuss the main features of Capital Asset Pricing Model (CAPM) and comment on the validity of the model in the real world.Please compare and contrast several of the different tools that can be used to evaluate potential capital investments (e.g. NVP, IRR, payback period, ARR, etc.).
- Which of the following are present value methods of analyzing capital investment proposals? a. internal rate of return and average rate of return b. average rate of return and net present value c. net present value and cash payback d. net present value and internal rate of returnTechnically, the required return of an investment can be determined by determining the investments risk profile. However, many intangible factors influence an investor’s decision to invest. Discuss the intangible factors that may come into play in the investment decision process.why is a risk analysis important to the capital investment decision making process?
- The computations involved in the net present value method of analyzing capital investment proposals are more involved than those for the average rate of return method. O True FalseDiscuss two limitations of using the weighted average cost of capital when making investment decisions.Illustrate the method of investment risk: Investment?
- The profitability index is another method to evaluate capital investments. If you are trying to compare investments of different sizes, why is the profitability index a better way to do this when compared to the net present value method?1. How to compare different assets in investment selection process? 2. What are the quantitative characteristics of the assets and how to measure them? 3. How does one asset in the same portfolio influence the other one in the same portfolio? 4. And what could be the influence of this relationship to the investor’s portfolio? 5. What is relationship between the returns on an asset and returns in the whole market (market portfolio)?What are the benefits of a capital market that works well and efficiently and has a deep and diverse range of financial instruments? Explain.
