What was the average nominal risk premium

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Reference no: EM131991403

1. The duration of GE bond you own is 5.00 years. Currently, interest rates are 6.00%, but you believe the Fed is about to increase interest rates by 22.00 basis points. What is the predicted price change for your bond?

2. You’ve observed the following return on a stock over the past four year: 10%, -5%, 3%, and 17%. Suppose the average inflation rate over this time period was 1.6% and the average T-Bill rate was 2.7%. What was the average nominal risk premium?

a. 3.55% b. 1.95% c. 6.25% d. 10.9%

Reference no: EM131991403

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