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In General,the Required Rate of Return Is a Function of (1)the

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In general,the required rate of return is a function of (1)the time value of money,(2)the risk of an asset,and (3)the investor's attitude toward risk.


Definitions:

Credit Risk

The potential for loss due to a borrower's failure to make payments on any type of debt.

Tax Treatment

The specific way tax laws apply to particular transactions or classes of income in a financial context.

Interest Rates

The percentage rate of a loan that is charged as interest to the borrower, routinely represented as an annual percentage of the outstanding loan principal.

New Shares

Shares that are issued by a company for the first time to the public, typically through an initial public offering (IPO) to raise capital.

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