extra 6 Flashcards
1
Q
Wat is risk premium
A
Expected return in excess of risk-free return as compensation for risk
2
Q
Hoe bereken je de real rate of return (met inlfatie)
A
1+ rate of return/ 1/ inflation
3
Q
Wat is risk premium
A
Extra return that investors demand to take on the risk of a particular investment compared to a risk-free investment
4
Q
Wat is market risk premium
A
Risk premium of market portfolio. Difference between market return and
return on risk-free Treasury bills
5
Q
Wat is beta
A
If the market goes up 10% the asset also goes up this much if the beta is 1
6
Q
Wat betekent het als de IRR hoger is dan de WACC
A
If the IRR is greater than the WACC the project is expected to generate returns higher than the firm’s cost of capital, suggesting that the project should add value to the firm
