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Expected rate of return

  1. Nov 22, 2008 #1
    1. The problem statement, all variables and given/known data

    I have searched the net for an online calculator to figure out this problem. Your expertise would help!

    An investment of 3 million dollars is expected to become 6 million dollars in ten years. What is the expected rate of return?




    2. Relevant equations

    E(Ri) = Rf + ßi(Rm – Rf); whereby E(Ri) is the expected rate of return on an investment, Rf is the rate of return on risk-free asset, ßi is an investment's beta, and (Rm – Rf) is the market risk premium;





    3. The attempt at a solution
     
  2. jcsd
  3. Nov 23, 2008 #2

    Redbelly98

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    Since we're mostly people with physics and math backgrounds, many people in here probably don't even know what beta or market risk premium mean.

    When I first read the question, it looked like a basic exponential growth problem, and they're asking for the annual percentage yield (APY) for the investment.
     
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