What is the average risk premium

Assignment Help Financial Management
Reference no: EM131351426

Suppose the average inflation rate is 2.9%, the average nominal return on stocks is 10.2%, and the average yield on treasrury bonds is 4.2%. What is the average risk premium?

Reference no: EM131351426

Questions Cloud

Describe some research questions might address with a survey : What are some factors to take into consideration when constructing questions for surveys (including both questions and response alternatives)?
What is a social desirability response set : Compare the diff erent questionnaire, interview, and Internet survey administration methods.- Define interviewer bias.- What is a social desirability response set?
Determine the equation of the hyperbola : Place the two ranger stations on the x-axis with the midpoint between the two stations at the origin. The transverse axis is horizontal.
Business guarantee a better decision : 1. After reviewing Managerial Support Systems, would using a decision support system in a business guarantee a better decision? What makes a good decision? Explain your answers.
What is the average risk premium : Suppose the average inflation rate is 2.9%, the average nominal return on stocks is 10.2%, and the average yield on treasrury bonds is 4.2%. What is the average risk premium?
Distinguish between haphazard and quota sampling : How does sample size affect the interpretation of survey results?- Distinguish between haphazard and quota sampling.
What are two types of positive communication styles : You are working at the veteran's agency and your caseload includes men with PTSD. They are uniquely experienced in mortal combat. They recently returned from battle zones in Afghanistan and Iraq. Many of their friends have died in battle. Some won..
What is the difference between private and shared worldviews : What is the difference between private and shared worldviews? How do we know right from wrong? Is there a spiritual part to the universe? Does life have meaning? Are humans merely higher orders of mammals?
What is the forecasted market value of the year bonds : The portfolio manager of Buy-Lo&Sell-Hi Company has excess cash that is to be invested for four years. He can purchase four year bonds of Groogle Company with 9 percent yield to maturity. What is the forecasted market value of the 20-year bonds in fo..

Reviews

Write a Review

Financial Management Questions & Answers

  Free cash flow during the year just-ended

Florida Development, Inc.'s free cash flow (FCF) during the year just-ended (t = 0) was $75 million, and FCF is expected to grow at a constant rate of 6.50% per year in the future. If the weighted average cost of capital is 18%, what is the firm's va..

  Purpose of the coinsurance in both types of insurance

Coinsurance clauses are found in many property policies as well as in many health insurance policies, although the purpose of each is vastly different. Explain the purpose of the coinsurance in both types of insurance.

  About the option portfolio

Consider the following option portfolio. You write a July 2007 expiration call option on IBM with exercise price $90. You also write a July expiration IBM put option with exercise price $85. What will be the profit/loss on this position if IBM is sel..

  How is opportunity cost concept used in capital budgeting

How is the opportunity cost concept used in the capital budgeting process? What are the potential tax consequences of selling an old asset in an asset replacement investment decision?

  What is the future value of this investment

Imagine homer simpson invested 100000 5 years ago at a 14% annual interest rate. if he invested an additional 2200 a year at the beginning of each year for 10 years at the same 14 % annual rate, how much money will homer have 10 years from now? if ho..

  What is the equivalent present value of the prize

At the reading of the will, you learn that your inheritance will allow you to receive the amount of $5800 at the end of each year for a total of 14 consecutive years. However, because of your young age, these amounts will not begin until the end of 6..

  Related to regardless of your major

Related to Regardless of Your Major: Welcome to the World of Finance on page 4) In the Regardless of Your Major feature box at the beginning of this chapter, we discussed how the topic of Principle 1, the time value of money, is relevant to both your..

  Controlling for sensitivity to the market

Suppose you believe that after controlling for sensitivity to the market, smaller firms should have higher returns. In two sentences, explain what market frictions would lead to that anomaly.

  What is the present value or worth of this bond

Assume a $1,000 face value bond has a coupon rate of 8.5 percent paid semiannually and has an eight-year life. If investors are willing to accept a 10 percent rate of return on bonds of similar quality, what is the present value or worth of this bond..

  Take the firm to sell its inventory assuming

Al's Sport Store has sales of $2,910, costs of goods sold of $2,130, inventory of $527, and accounts receivable of $449. How many days, on average, does it take the firm to sell its inventory assuming that all sales are on credit?

  After-tax cost of capital to for bond-after-tax cost of debt

(Cost of debt) The Walgreen Corporation is contemplating a new investment that it plans to finance using one-third debt. The firm can sell new $1,000 par value bonds with a 15-year maturity at a price of $948 that carries a coupon interest rate of 12..

  Calculate the selling price for each of the bonds

Mark Goldsmith’s broker has shown him two bonds. Each has a maturity of 5 years, a par value of $1,000, and a yield to maturity of 12%. Bond A has a coupon interest rate of 6% paid annually. Bond B has a coupon interest rate of 14% paid annually. Cal..

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