Calculate the approximate risk premium for common stocks

Reference no: EM1346238

Assume that the consensus required rate of return on common stocks is 14 percent. In addition, you read in Fortune that the expected rate of inflation is 5 percent and the estimated long-term real growth rate is 3 percent. What interest rate would you expect on U.S. government T-bills? What is the approximate risk premium for common stocks implied by this data?

Reference no: EM1346238

Questions Cloud

What revealed that the buyers were on average : which revealed that the buyers were, on average, willing to pay a premium of $295 for an IBM computer.

Find issues within the organization : Find issues within the organization and examine and delimits each issue

Determine markup percentage : A production corporation produces and sells 40,000 units of a single product. Variable costs total $80,000 & fixed costs total $120,000. If unit is sold for dollar 8,

Elucidate how you would address each of the main problems : Elucidate how you would address each of the main problems in the organization.

Calculate the approximate risk premium for common stocks : Suppose that the consensus required rate of return on common stocks is 14%. In addition, you read in Fortune that expected rate of inflation is 5% & estimated long-term real growth rate is 3%.

Show the challenges of communication : Compare and contrast the communication methods used to manage a virtual team as opposed to a face-to-face team. Also, show the challenges of communication often faced with each type of team.

Illustrate what is the firm current profit : Illustrate what is the firm's current profit. Illustrate what is likely to occur in this market.

Describe the role of culture in international business : Describe the role of culture in international business - suggest ways to maximize cross-cultural communication.

Find the highest price for the stock : A stock is expected to pay a dividend of $2.50 one year from today, & growth rate is expected to be steady at 8 percent. If your required return is 14 percent,

User Account

All Pages