Suppose initially that two assets, A and B, will each make a single guaranteed payment of $100 in one year. But asset A has a current price of $85 while asset B has a current price of $95.

a. What are the rates of return of assets A and B at their current prices?

Return on asset A = ?

Return on asset B = ?

Guest Dec 4, 2018

edited by
Guest
Dec 4, 2018

#1**+1 **

Asset A costs 85 returns 100 in a year for an increase $ 15 15/85= 17.65% ROR

B 95 5 5/95 = 5.26% ROR

ElectricPavlov Dec 4, 2018