A Generous Benefactor to the Local Ballet Plans to Make

question 139

Multiple Choice

A generous benefactor to the local ballet plans to make a one-time endowment which would provide the ballet with $150,000 per year into perpetuity. The rate of interest is expected to be 5 percent for all future time periods. How large must the endowment be?

• A) $ 300,000
• B) $3,000,000
• C) $ 750,000
• D) $1,428,571

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Security Market Line

A line that represents the relationship between the expected return of a security and its systematic risk, illustrating the risk-return trade-off in the capital asset pricing model (CAPM).

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The proportion of a specific asset within an investment portfolio relative to the total asset value of the portfolio.

Beta

A measure of a stock's volatility in comparison to the overall market, indicating its relative risk.

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