If You Put $400 into a Bank Account Today and It

question 181

Short Answer

If you put $400 into a bank account today and it promises to pay 5% interest for 6 years, how much is in the account at the end of the six years?

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Definitions:

Security Market Line

A representation of the relationship between the risk of an investment and its expected return, used in the Capital Asset Pricing Model.

Expected Return

The average of all possible investment returns, each weighted by its probability of occurrence.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, used in statistics to quantify the degree of difference from the average.

Beta

A metric indicating the level of fluctuation or inherent risk in a security or portfolio relative to the overall market.