Efficient allocation of liquidity and investment resources

Assignment Help Financial Management

Reference no: EM132039671

The stock market and the bond market. Over the period 1928-2013, investments in an index of the Standard and Poor’s 500 stocks have given annual returns of 9.55%, investments in 10-year Treasury Bonds have given a return of 4.93%, and investments in 3-month Treasury bills have yielded 3.55%.

a. Which is the most risky of these investments? Describe the risks associated with each investment. Do you think that risk explains the different rates of return?

b. Explain which is the most liquid of these investments? Do you think this explains the different rates of return?

c. You can buy common stocks only from one of 1366 brokers with a seat on the New York Stock Exchange; treasury bills and bonds are purchased through a broker or directly from the United States government. Do you think these differences might explain the different rates of return?

d. How might these different rates of return encourage or discourage the efficient allocation of liquidity and investment resources?

Reference no: EM132039671

Questions Cloud

What is the company value : A company has an un-leveraged value of 3,000,000 and debt 300,000. If the company is subject to a corporate tax rate of 0.30, and investors

Expected rate of return of hayek corporation : Hayek Corporation has a 0.3 probability of a return of 0.40, a 0.4 probability of a rate of return of 0.07, and the remaining probability of a 0.00 rate

Record the purchase of supplies on may : At the beginning of May, Golden Gopher Company reports a balance in Supplies of $510. Record the purchase of supplies on May 15

Discuss the ethical issues of social networks : Discuss the ethical issues of social networks and anytime, anywhere accessibility. What are the four primary factors described in the text that set the state.

Efficient allocation of liquidity and investment resources : How might these different rates of return encourage or discourage the efficient allocation of liquidity and investment resources?

Prepare a requirements traceability matrix : Prepare requirements documentation and a requirements traceability matrix (RTM). The requirements documentation should be in MS Word.

What is the value of the business today : The annual cost of capital (or interest rate) for this type of business was 8% with monthly compounding. What is the value of the business today?

What is the amount of stockholders equity of exxonmobil : Citigroup reports total liabilities of $1,330 billion and stockholders' equity of $99 billion. What is the amount of stockholders' equity of ExxonMobil

What is the expected return of portfolio : You have ?$66,000. You put 19?% of your money in a stock with an expected return of 11?%, ?$31,000 in a stock with an expected return of 18?%

User Account

All Pages