True or False. Justify for full credit.
January 16, 2018
Complete your scientific inquiry research using three credible sources. Start by summarizing the similarities and differences between social inquiry and the everyday assumptions that people make
January 16, 2018

Estimate the rate of return for two similar risk investments, X and Y,

Douglas Keel, a financial analyst for Orange Industries, wishes to estimate the rate of return for two similar risk investments, X and Y, Douglas’s research indicates that the immediate past returns will serve as reasonable estimates of future returns. A year earlier, investment X had a market value of $20,000, and investment Y had a market value of $55,000. During the year, investment X generated cash flows of $1,500, and investment Y generated cash flow of $6,800. The current market value of investments X and Y are $21,000 and $55,000 respectively.

a. Calculate the expected rate of return on investments X and Y using the most recent year’s data

b. Assuming that the two investments are equally risky, which one should Douglas recommend? Why?

 

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