What was the average real risk premium

Assignment Help Financial Management
Reference no: EM131609640

You've observe the following return on crash-n-burn computer's stock over the past five years: 14 percent, -9 percent, 16 percent, 21 percent, and 3 percent. Suppose the average inflation rate over this period was 3.5 percent and the average t-bill rate over the period was 4.2 percent.

What was the average real risk-free rate over this time period?

What was the average real risk premium?

Reference no: EM131609640

Questions Cloud

Returns on long-term government bonds are distributed : Suppose the returns on long-term government bonds are normally distributed. What range would you expect to see 95 percent of the time?
Forms of business does not have flow-through taxation : Which of the following forms of business does not have flow-through taxation?
Present value-net realizable value and current cost : Present value ° Net Realizable value ° Current cost ° Fair value.
Equivalent annual cost to evaluate : You can continue to use your less efficient machine at a cost of $4,000 annually for the next five years. Use Equivalent Annual Cost to evaluate.
What was the average real risk premium : What was the average real risk-free rate over this time period? What was the average real risk premium?
Adjustment by budget analyst reviewing budget request : Which ONE of the following would NOT be likely to trigger a question or adjustment by a budget analyst reviewing a budget request
Market driven by earning growth that exceeds cost of capital : You want to see the market driven by earnings growth that exceeds the cost of capital.
Invest the money in stock with beta : If you invest the money in a stock with a beta of 1.45, what will be the required return on your $5.5 million portfolio?
What is the component cost of debt : What is the component cost of debt for use in the WACC calculation?

Reviews

Write a Review

Financial Management Questions & Answers

  Bonds are selling at par value-what is the cost of equity

Johnson Tire Distributors has an unlevered cost of capital of 12 %, a tax rate of 34 %, and expected earnings before interest and taxes of $1,600. The company has $2,700 in bonds outstanding that have a 7 % coupon and pay interest annually. The bonds..

  What would be the future value of this same annuity

An ordinary annuity has an interest rate of 10% and a future value of 80.00. What would be the future value of this same annuity, if it were an annuity due instead of a regular annuity? The future value of this annuity due is $

  What are the total carrying costs

ABC Company sells 2,587 chairs a year at an average price per chair of $153. The carrying cost per unit is $18.42. The company orders 380 chairs at a time and has a fixed order cost of $109.7 per order. The chairs are sold out before they are restock..

  Calculate the required rate of return on companys stock

Calculate the required rate of return on a company’s stock that has the following characteristics: (a) Constant Growth Rate: 5%, (b) Price: $25.00, and (c) Dividend (Has Been Paid): $5.00.

  What is the firm after-tax component cost of debt

A company's 8% coupon rate, semiannual payment, $1,000 par value bond that matures in 20 years sells at a price of $717.47. The company's federal plus-state tax rate is 30%. What is the firm's after-tax component cost of debt for purposes of calculat..

  What will be company new roe

A company has a profit margin of 10%, an asset turnover ratio of 1.6, and an equity multiplier ratio of 1.65, what will be company’s new ROE?

  What planning opportunities can you suggest

Martha, a 75-year-old widow, owns more than $2 million in assets. Martha's son, Jonathan, has two children, ages 10 and 13. What planning opportunities can you suggest so that Martha can provide for her grandchildren's education while minimizing any..

  What is the bonds nominal coupon interest rate

O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 25 years. Their nominal yield to maturity is 9.25%, they pay interest semiannually, and they sell at a price of $975. What is the bond's nominal coupon interest rate?

  Replacing old assembly line-what is the net investment

IBM is replacing an old assembly line that cost $80,000 five years ago, If IBM has a marginal tax rate of 40 percent, what is the net investment?

  Discuss your interview process-time management

Interview/Observation: Discuss your interview process. In this section, you may want to address things like difficulties or successes you had finding or planning your interview/observation, surprises you encountered, how or if you could have done you..

  What is their yield to maturity and their yield to call

Thatcher Corporation's bonds will mature in 17 years. The bonds have a face value of $1,000 and an 11% coupon rate, paid semiannually. The price of the bonds is $1,050. The bonds are callable in 5 years at a call price of $1,050. What is their yield ..

  How much will the plumber receive

If the bank gets a 10% return on its investment, how much will the plumber receive? Will it be enough to pay a bill for $15,054?

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