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Suppose we have the following returns for large-company stocks and Treasury bills over a six year period: Year) Large Company /US Treasury Bill 1 3.99 /4.59 2 14.16 /4.94 3 19.25 /3.86 4 –14.43/ 6.99 5 –31.92 /5.30 6 37.49 /6.20 a. Calculate the arithmetic average returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Average returns Large company stocks % T-bills % b. Calculate the standard deviation of the returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation Large company stocks % T-bills % c-1 Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the average risk premium over this period? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average risk premium % c-2 Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the standard deviation of the risk premium over this period? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation %
The expected return on a security given two unequal states of the economy:
An expansion project being considered by your firm has an initial cost of $1,250,000 and expected net cash flows of $270,000 per year for the first 3 years, and $380,000 per year for the next three years. Calculate the Net Present Value (NPV), the Mo..
On January 1, Stacy's portfolio was valued at $96,534. During the year Stacy received $3,285 in interest and $4,100 in dividends. She also sold one stock at a gain of $850. The value of the portfolio on December 31 of the same year was $113,201. At t..
Determine how your company got its initial financial start in terms of debt (liabilities) or equity (capital). Support your response.
write an explanatory note on otcei
An investor is forming a portfolio by investing $40,000 in stock A which has a beta of 1.80, and $10,000 in stock B which has a beta of o.90. The return on the market is equal to 8.5 % and treasure bonds have a yield of 3.5%(rrf). What’s the required..
Railway Cabooses just paid its annual dividend of $4.10 per share. The company has been reducing the dividends by 12.5 percent each year. How much are you willing to pay today to purchase stock in this company if your required rate of return is 14 pe..
What are the three distribution methods available to Annette? Which method should she choose to maximize tax deferral? Based on the appropriate life table, how much would her first required distribution be? When would this distribution happen?
Which one of the following is the pretax cost of debt?
Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 1 78,000 2 91,000 3 105,000 4 100,000 5 81,000 Production of the implants will require $1,570,000 in net working capital to sta..
A 6.60 percent coupon bond with 15 years left to maturity is priced to offer a 5.3 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.0 percent. What would be the total return of the bond in dollars? What would b..
You have been asked by a manager in your organization to put together a training program explaining Net Present Value (NPV) and Future Value (FV) and how they are used to evaluate the price of stock. Describe the factors that are used in the NPV and ..
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