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Returns to an Asset - Essay Example
Finance & Accounting
Pages 8 (2008 words)
Returns to an Asset No: Date: Returns to an Asset Introduction Returns is a significant terms in finance. Returns are the measure to determine the alternating in the value of the assets over a fixed period of time…
Having knowledge of the statistical properties also makes it easier to evaluate the efficiency of the financial assets. The financial assets are then modelled for better knowledge of the returns. Background to the Data Sample There are many concepts that are adopted in the finance to make the concept of finance management more clear. Some of the concepts are considered to the appropriate for other branches and some are altered to suite the financial setup. Interest is considered as one of the fundamental concepts incorporated in finance and related organizations. Interest is termed as the fixed profit over an investment in a particular time frame. Mostly, it is calculated in terms of percentage, like if a person invests ?100 and the rate of interest is 5% in a year, the organization that deposited the amount will have to pay ?105 in a year (Wang, Lecture 1, n.d.,). Sometimes the rate of interest is divided into monthly basis like if the interest rate of 5% is divided into monthly instalments, the person that deposited the sum will be given 0.4% per month. Interest has two types; compound interest and simple interest. The simple interest is only applied to the original amount. Like if a person deposited ?100 in bank at the rate of 5% simple interest annually, he will be given interest on ?100 every year. The compound interest in applied on the original amount plus the interest amount. ...
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