What was the nominal risk premium

Assignment Help Financial Management
Reference no: EM13928048

Last year, Paul invested $38,000 in Oil Town stock, $11,000 in long-term government bonds, and $8,000 in U.S. Treasury bills. Over the course of the year, he earned returns of 12.1 percent, 7.2 percent, and 4.1 percent, respectively. What was the nominal risk premium on Oil Town's stock for the year? 2.1 percent 4.9 percent 6.0 percent 8.0 percent 7.8 percent

Reference no: EM13928048

Questions Cloud

Derive the marriage theorem from tuttes theorem : Show that a graph G contains k independent edges if and only if q(G - S) ≤ |S| + |G| - 2k for all sets S ⊆ V (G). Find a cubic graph without a 1-factorHint : Corollary 2.2.2. Derive the marriage theorem from Tutte's theorem.
What would the annual yield to maturity be on the bond : Sweet Fruit, Inc. has a $1000 par value bond that is currently selling for $1280. It has an annual coupon rate of 9.90 percent, paid semi annually, and has 10-years remaining until maturity. What would the annual yield to maturity be on the bond if y..
According to the efficient markets hypothesis : According to the efficient markets hypothesis, professional investors will earn: excess profits over the long-term. a dollar return equal to the value paid for an investment. excess profits, but only on short-term investments. a return that "beats th..
Narrowest distribution of returns for the period : Which one of the following has the narrowest distribution of returns for the period 1926-2011?
What was the nominal risk premium : Last year, Paul invested $38,000 in Oil Town stock, $11,000 in long-term government bonds, and $8,000 in U.S. Treasury bills. Over the course of the year, he earned returns of 12.1 percent, 7.2 percent, and 4.1 percent, respectively. What was the nom..
Compound return earned per year over a multiyear period : Which one of the following is defined as the average compound return earned per year over a multiyear period? Normal distribution of returns Variance of returns Geometric average returns Arithmetic average return Standard deviation of returns
What is this excess return called : Investors require a 4 percent return on risk-free investments. On a particular risky investment, investors require an excess return of 7 percent in addition to the risk-free rate of 4 percent. What is this excess return called? Required return Inflat..
Machine has been fully depreciated and has no salvage value : Mississippi River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings before depreciation from $27,000 to $56,000 per year. The old machine has been fully depreciated and has no salvag..
If the financial markets are semi strong form efficient : If the financial markets are semi strong form efficient, then: every security offers the same rate of return. Only individuals with private information have a marketplace advantage. no one individual has an advantage in the marketplace. Only the most..

Reviews

Write a Review

 

Financial Management Questions & Answers

  What was clantons gross profit margin

In 2002 Clanton, Inc. had a gross profit of $27,000 on sales of $110,000. Clanton's operating expenses for 2002 were $13,000, and its net profit margin was .0585. Clanton had no interest expense in 2002. What was Clanton's gross profit margin for 200..

  Find the total amount in the two accounts combined

You make a one-time deposit of $1,000 into an account (Account A) which pays out 8% effective annual interest at the end of each year. Each year, you take the interest payout and deposit it into an account (Account B) earning an effective annual inte..

  What is amount of the dividend check the dawson couple

Jamie and Peter Dawson own 220 shares of Duke Energy Common stock. Duke energy's quarterly dividend is $0.28 per share. What is the amount of the dividend check the Dawson couple will receive for this quarter?

  Hsieh-hseih inc must choose between two copiers the zz20

1. hsieh-hseih inc. must choose between two copiers the zz20 or the gg50.the zz20 costs 300 and will last for three

  Type of factor that drives stock prices

Which of the following is not a type of factor that drives stock prices, according to your text?

  Pledges to increase its dividend

Metroplex Corporation will pay a $3.80 per share dividend next year. The company pledges to increase its dividend by 3.0 percent per year indefinitely. If you require an 11.9 percent return on your investment, you will pay $___________ for the compan..

  The bonds make semi-annual payments

Volbeat Corporation has bonds on the market with 14.5 years to maturity, a YTM of 10.2 percent, and a current price of $953. The bonds make semi-annual payments.

  How much should we budget for electricity

Last year we budgeted $8,000 for electricity. We expect to the price per kilowatt hour (kWh) to go up from 6.5 cents per kWh to 7 cents per kWh. We have also recently implemented a program to reduce energy usage and expect our usage to decrease by 20..

  Assume that the yield to maturity remains constant

A bond has a $1,000 par value, 15 years to maturity, and a 8% annual coupon and sells for $1,080. A) Assume that the yield to maturity remains constant for the next 4 years. What will the price be 4 years from today?

  What is its economic value added

Victoria Adeleye Co. has the following data for the year ending 12/31/10: Net income = $600; Net operating profit after taxes (NOPAT) = $700; Total assets = $2,500; Short-term investments = $200; Stockholders' equity = $1,800; Total debt = $700; and ..

  Importance of identifying the primary source of repayment

Explain the importance of identifying the primary source of repayment. Clearly, the primary source of repayment is always cash. The analysis question is really one of identifying the source of the cash used to repay the loan. Explain the advantages a..

  Two different bonds currently outstanding

The Morgan Corporation has two different bonds currently outstanding. Bond M has a face value of $30,000 and matures in 20 years. The bond makes no payments for the first six years, then pays $2,400 every six months over the subsequent eight years, a..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd