What was the average nominal risk premium on stock

Assignment Help Financial Management
Reference no: EM131064916

You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 3 percent, -10 percent, 26 percent, 13 percent, and 17 percent. The average inflation rate over this period was 3.4 percent and the average T-bill rate was 4.85 percent. Requirement 1: What was the average real return on Crash-n-Burn’s stock? (Do not round intermediate calculations.) Requirement 2: What was the average nominal risk premium on Crash-n-Burn’s stock? (Do not round intermediate calculations.)

Reference no: EM131064916

Questions Cloud

Should this project be accepted based on profitability index : Nelson's Lamps is considering the acquisition of some new store fixtures. These fixtures will cost $189,000 and generate the following cash flows over its 5-year life: $65,700, $69,800, $57,600, $54,200 and $11,500. Should this project be accepted ba..
Brief performance specification for a robotic hand : Performance specifications of robotic hand that can write? - ??write a brief performance specification for a robotic hand that will perform all the tasks that a human does when writing.
Markets required to yield to maturity on risk bond : A bond of Telink Corporation pays $100 in annual interest with a $1000 par value. The bonds mature in 15 years. The market's required yield to maturity on a comparable-risk bond is 9 percent. Calculate the value of the bond. What is the value of the ..
Prepare a professional sales presentation : Choose a product or service in an industry that interests you. Your assignment is to prepare a professional sales presentation that demonstrates your mastery of the concepts learned in this class.
What was the average nominal risk premium on stock : You’ve observed the following returns on Crash-n-Burn Computer’s stock over the past five years: 3 percent, -10 percent, 26 percent, 13 percent, and 17 percent. What was the average real return on Crash-n-Burn’s stock? What was the average nominal ri..
Determine the value of the actuating force : For maximum braking, determine: The value of the actuating force, F. The value of the brake torque, T
Write a one page summary about the article just add water : Write a One page summary about the article "Just Add Water". The link of article is http://www.nhm.org/site/explore-exhibits/upcoming-exhibits/just-add-water
Determined that two-factor model : A researcher has determined that a two-factor model is appropriate to determine the return on a stock. The factors are the percentage change in GNP and an interest rate. GNP is expected to grow by 5.6 percent, and the interest rate is expected to be ..
Summarise the major opportunities and risks : Discuss the requirements for remote administration, resource management and SLA management. It may be useful to consider Morad and Dalbhanjan's operational checklists for DSI's OSDS. This section should be no more than two to three pages in length..

Reviews

Write a Review

Financial Management Questions & Answers

  What line items reflected the largest-percentage increases

What line items reflected the largest-percentage increases

  What is the annualized lease rate for this copper contract

The spot price of copper is $70 per ounce. The 9-month forward price is $72.13. The continuously compounded risk-free rate is 5%. What is the annualized lease rate for this copper contract?

  About a good-til-cancelled order

Which one of the following statements is correct about a good-'til-cancelled order? The order generally expires after six weeks. The order will automatically renew unless cancelled by the customer.

  Covered as workers compensation claim

It’s the end of the summer and your firm has its annual Family Picnic Day on the Saturday of Labor Day weekend. It is a big event: games for kids, a magician who makes balloon animals, tons of great food, kegs of beer, a band for musical entertainmen..

  What is the price today for a delicious mills bond

25 years ago, Delicious Mills, Inc. issued 30-year to maturity bonds that had a 8.98 percent annual coupon rate, paid semiannually. The bonds had a $1,000 face value. Since then, interest rates in general have changed and the yield to maturity on the..

  What would be the price of the bond if the yield rose

What is the price of a $1,000 par value bond with a 6% coupon rate paid semiannually, if the bond is priced to yield 5% and it has 9 years to maturity? What would be the price of the bond if the yield rose to 7%. What is the current yield on the bond..

  Which of these indicates that a firm is efficient

What is the residual income for a firm with $1 million in total capital, $300,000 in net income, and a 20% cost of capital? Which of these indicates that a firm is efficient?

  Determine the magnitude of year investment that an investor

Reclamation costs on a project are expected to be incurred over a 30 year period from 27 to 56 years in the future from now. Reclamation costs are estimated to escalate 7% per year in the future.

  Net outlay to establish the entire portfolio

You buy a share of stock, write a one-year call option with X = $18, and buy a one-year put option with X = $18. Your net outlay to establish the entire portfolio is $17.50. What must be the risk-free interest rate? The stock pays no dividends.

  Losses will exceed your total fixed costs

If price of your product is below the minimum ATC you should: A) minimize your losses by producing where P=MC B) maximize your profits by producing where P=MC C) close down because by producing your losses will exceed your total fixed costs D) close ..

  Bond-yield-plus-judgmental-risk-premium approach

The earnings, dividends, and common stock price of Shelby Inc. are expected to grow at 5% per year in the future. Shelby's common stock sells for $22.00 per share, its last dividend was $2.40, and the company will pay a dividend of $2.52 at the end o..

  Mix between long-term debt and preferred and common stock

What is the "mix" between long-term debt and preferred stock and common stock in the healthcare industry? Please cite a specific example which has not been used already by an earlier-responding student. Where did you find this data? What is the cost ..

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