What was average real return on crash-n-burn stock

Assignment Help Financial Management
Reference no: EM131577370

You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 13 percent, –8 percent, 16 percent, 16 percent, and 10 percent. Suppose the average inflation rate over this period was 1.5 percent and the average T-bill rate over the period was 5 percent.

a. What was the average real return on Crash-n-Burn’s stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Average real return %

b. What was the average nominal risk premium on Crash-n-Burn’s stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.)

Average nominal risk premium %

Reference no: EM131577370

Questions Cloud

Definition for time value of an american call option : Write the precise definition for Time Value of an American Call Option wit Strike Price X.
At the most recent strategic planning meeting : At the most recent strategic planning meeting, Analyze the impact on the cash flow statement based on the given scenario.
Debt to equity ratio and ebit and ebitda coverage ratio : Financial ratios are often used for quick look at the valuation. when do you use Debt to Equity ratio and EBIT/ EBITDA coverage ratio?
Which this product will meet management required return : what is the lowest level of market share at which this product will meet management’s required return?
What was average real return on crash-n-burn stock : What was the average real return on Crash-n-Burn’s stock? What was the average nominal risk premium on Crash-n-Burn’s stock?
How much is bond worth now : A 30-year bond has a face value of $1,000 and a coupon rate of 6% per year, how much is the bond worth now?
Value of roe on future investment opportunities : If the expected earnings per share are $16, what is the implied value of the ROE on future investment opportunities?
Calculate the valuation metrics that management : You are an investment analyst for a large Dallas based oil company. Calculate the valuation metrics that management would want to see for each scenario
Concepts of time value of money in engineering projects : What is time value of money? Explain the concepts of time value of money in engineering projects.

Reviews

Write a Review

Financial Management Questions & Answers

  What would be appropriate value of ford new corporate bond

What would be the appropriate value of Ford's new corporate bond?

  Activist shareholders will use proxy voting to further cause

Many activist shareholders will use proxy voting to further their cause. Most companies are required to hold a stockholder meeting at least once a year.

  What were critical economic issues of the tax cut debate

Was there a production gap when Kennedy assumed the presidency in January 1961? How large was it? Assume a GNP growth rate of 3.3% starting in 1955 and project forward using Excel document. Attach the file directly to the discussion board. What were ..

  Calculate the current yield for the bond

Calculate the current yield for the following bond – a 15 year corporate bond issued 4 years ago with a 5% coupon rate and similar bonds today have 4% coupon rates. Calculate the YTM for the following corporate bond – 6% coupon, 8 years left to matur..

  Benchmark market value index is comprised of three stocks

A benchmark market value index is comprised of three stocks. Yesterday the three stocks were priced at $20, $30, and $65. The number of outstanding shares for each is 770,000 shares, 670,000 shares, and 370,000 shares, respectively. If the stock pric..

  What is the value of a share of stephens stock

The required rate of return for stock of similar risk is 10%. What is the value of a share of Stephens’ stock?

  What are typical start up costs for any type of business

What are typical start up costs for any type of business ? give example for cost of a business license. why is it so important for small business owners to understand financial statement ?

  Find the price of a call option on stock

The current price of a stock is $21. In 1 year, the price will be either $28 or $15. The annual risk-free rate is 3%. Find the price of a call option on the stock that has a strike price is of $23 and that expires in 1 year. (Hint: Use daily compound..

  Ranges of the stock price at maturity

A call with a strike price of $60 costs $6. A put with the same strike price and expiration date costs $4. A trader creates a straddle by buying a call option and a put option, and holds it until maturity. For which of the following ranges of the sto..

  Common stock is currently selling

Builtrite’s common stock is currently selling for $48 a share and the firm just paid an annual dividend of $2.30 per share. Management believes that dividends and earnings should grow at 8% annually. Since new stock would need to be sold to finance a..

  About the default risk premium

A Treasury bond that matures in 10 years has a yield of 4.75%. A 10-year corporate bond has a yield of 10%. Assume that the liquidity premium on the corporate bond is 0.3%. What is the default risk premium on the corporate bond?

  Retirement from the treasury bond vs the mutual fund

What income is he collecting in those options? How much will he have in retirement from the Treasury Bond vs the Mutual Fund?

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