Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Suppose a venture fund wishes to base its required return (used in discounting future terminal values) on its historical experience and suggests merely averaging the rates on the last three concluded deals. These deals realized total returns of -67% at the end of 2 years, 50% at the end of 5 years and 70% at the end of three years, respectively.

Assuming no intermediate flows before the terminal payoff, verify that the associated annualized rates are -42.55%, 8.45% and 19.35%.

What is the equally weighted average annualized return?

Does it make sense to use this as a single discount rate to apply across scenarios involving different durations?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M938532

Have any Question? 


Related Questions in Basic Finance

1 what are sources of economic profits for a company or an

1 .What are sources of economic profits for a company or an industry? 2. The following is an excerpt that appeared in an article "Strategic Planning: Not Just for Big Business" published at www.smallbusinessnotes. com/pl ...

1 why consider agency and corporate bonds over treasuries2

1. Why consider agency and corporate bonds over Treasuries? 2. What are the major reasons why investors should consider buying convertible bonds? 3. What are the risks of zero-coupon securities?

Why do higher interest rates lead to higher call option

Why do higher interest rates lead to higher call option prices but lower put option prices? Suppose a European put price exceeds the value predicted by put-call parity. How could an investor profit? Demonstrate that your ...

1 when and why would nonprobability sampling methods be

1. When and why would nonprobability sampling methods be used? 2. Under what conditions is sampling bias likely to occur, what are its effects on generalization, and how can it be avoided? 3. Indicate the similarities an ...

1 discuss how the planningcoordination and operation flow

1. Discuss how the planning/coordination and operation flow differs for MTO and MTS firms. 2. Compare and contrast the role of planning/coordination and operations in improving firm competitiveness. 3. Compare and contra ...

1 a certain number of bankruptcies are good for the economy

1. A certain number of bankruptcies are good for the economy. Discuss why you agree or disagree with this statement. 2. A business should always be liquidated when the liquidation value exceeds the business's value as a ...

Katherine wishes to endow a professorship in honor of her

Katherine wishes to endow a professorship in honor of her beloved mycology professor. The University's development office has prepared a proposal for her review, to wit, "The Agnew Chair in Fungus Studies," which will co ...

Assume that european call and put options exist on a stock

Assume that European call and put options exist on a stock. That stock, however, is the target of a takeover in which an acquiring firm offers a fixed price for the stock. The takeover is almost certain to occur shortly ...

1 what is a pricing anomaly how might an investor use a

1. What is a pricing anomaly? How might an investor use a pricing anomaly to earn aboveaverage returns? 2. What is mean reversion? How might an investor use mean reversion to earn above-average returns? 3. What is excess ...

1 describe the major difference between within-subjects and

1. Describe the major difference between within-subjects and between-subjects designs. 2. Describe the advantages of the within-subjects design. 3. Describe the disadvantages of the within-subjects design. 4. Explain how ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen