FIN321 HW1 - Daniel Dorn PDF

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Daniel Dorn...

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FIN321 Homework #1 Professor Daniel Dorn Submitted by: Tanishq Joshi Date: 10/04/18 1. Real assets are physical assets that have value due to their substance and properties. Real assets include precious metals, commodities, real estate, agricultural land, machinery and oil, hence it is very important for an economy. On the other hand, tradable financial assets are assets that are non-physical whose value is derived from a contractual claim, such as bank deposits, bonds, and stocks. An economy’s arguably the most important indicator, according to me, is GDP which takes into account only real assets and not how many financial assets were traded, which is fair considering financial asset trade does not define how an economy is producing/selling/buying etc. 2. Screenshot -

3. Arithmetic Mean – 3.15% ; Geometric Mean – 2.33% ; IRR – (-0.166%) 4. IRR takes into account positive dollar amounts as well as negative dollar amounts as cash flows however geometric mean only takes into account the period return for the year and NOT the dollar value hence it is larger than the IRR.

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