What was the average risk premium for long term bonds

Assignment Help Financial Management

Reference no: EM131884753

The following data are the retums for 1980 through 1986 on five types ofcapital-market instruments: common stocks, small-capitilzation stocks, long-temm corporate bonds, long-tem US- government bonds, and U.S. Treasury Bills. You may wish to use a spreadsheet program to make your calculations

Year	Common Stock	Small Stocks	Long-term Corporate Bonds	Long-term . Government Bonds	S. Treasury Bills
1980	0.3242	0.3988	-0.0262	-0.0395	0.1124
1981	-0.0491	0.1388	-0.0096	0.0185	0.1471
1982	0.2141	0.2801	0.4379	0.4035	0.1054
1983	0.2251	0.3967	0.0470	0.0068	0.0880
1984	0.0627	-0.0667	0.1639	0.1543	0.0985
1985	0.3216	0.2466	0.3090	0.3097	0.0772
1986	0.1847	0.0686	0.1985	0.2444	0.0616

1. Calculate the holding period return for US treasury bills for the 7 year holding period of 1980 through 1986

2. Using the average US treasury Bill rate as a proxy rate, what was the average risk premium for small company common stocks for the 7 year period

3. Using the average US treasury Bill rate as a proxy rate, what was the average risk premium for Long term corporate bonds for the 7 year period.

Reference no: EM131884753

Questions Cloud

What is the economic order quantity : If a company has annual sales of 3,000,000, a cost of placing an order of $55, and a 45% carrying cost, what is the Economic Order Quantity?

Compute the beta equity for company new : Compute the beta equity for company NEW after its listing in the stock exchange.

How much should you be willing to pay today for promise : What is the present value of $1,000 received three years from today if interest rates are currently 6 percent?

Compute a materials price variance for the plates purchased : Compute a materials price variance for the plates purchased last month and a materials quantity variance for the plates used last month.

What was the average risk premium for long term bonds : Using the average US treasury Bill rate as a proxy rate, what was the average risk premium for Long term corporate bonds for the 7 year period.

Find what is the fergusons federal income taxes payable : Find what is the Fergusons' 2016 federal income taxes payable or refund, including any self-employment tax and AMT, if applicable?

What is the required rate of return for each stock : Calculate the beta for each stock. How does this relate to the situation described in Question #2?

Find the difference between budgeted and adjusted costs : Calculate the budgeted departmental costs. Calculate the adjusted departmental cost. Find the difference between budgeted and adjusted costs.

What is the net present value of the parking garage : What is the annual consumer surplus for residents who are 2 minutes away? What is the annual consumer surplus for residents who are 10 minutes away?

User Account

All Pages