What was the risk premium on common stock in each year

Assignment Help Financial Accounting
Reference no: EM132962638

Question - Assume these are the stock market and Treasury bill returns for a 5-year period:

Year Stock Market Return (%) T-Bill Return (%)

2013 32.50 0.07

2014 11.80 0.07

2015 -2.40 0.07

2016 13.70 0.25

2017 22.40 0.27

Required -

a. What was the risk premium on common stock in each year?

b. What was the average risk premium?

c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)

Reference no: EM132962638

Questions Cloud

How much would mary have at the end of the five years : How much would Mary have at the end of the five years? Supposing that at the end of every quarter Mary is depositing the stipend she receives
Problems of high attrition-cost in international operations : Accordingly to you, what should the management do now to address the problems of high attrition and cost in international operations?
Developing the compensation strategy : A) Identify and explain the current organizational problems (minimum of 5). These may include strategic. structural and other total rewards factors. (75-150 wor
How the deficiencies should have been avoided : How these deficiencies should have been avoided. As the amounts invested in these risky financial instruments increased, the then chief risk officer made
What was the risk premium on common stock in each year : Assume these are the stock market and Treasury bill returns for a 5-year period: What was the risk premium on common stock in each year
Calculate the effective annual rate of compound interest : Adi borrows $300 at 5% pa compounded half-yearly for 11 years. Calculate the effective annual rate of compound interest (j) that is being paid.
Can the market price be less than the conversion value : How much is the convertible holder paying for the option to buy one share of common stock? Can the market price be less than the conversion value?
What is the company wacc for abc corporation : Its cost of equity is 12.1 percent, and the cost of debt is 6.7 percent. The relevant tax rate is 25 percent. What is the company's WACC?
Compare the burden of debt and liqidity : Compare the burden of debt, liqidity, adequacy of financial resources, and current financial performance for the Parkinson's Disease Foundation

Reviews

Write a Review

Financial Accounting Questions & Answers

  How much james should repay monthly on mortgage

How much James should repay monthly on his mortgage after the farm finishes the construction? (after this James should start making payments.)

  Find the company discount rate is five percent

Buffalo's Steelers Inc. (MSI) is a steel manufacturing company, Find the company's discount rate is 5% and MSI reports under IFRS with a December 31 year-end.

  An increase in investments in long-term securities

An increase in investments in long-term securities will

  Why think the iasb decided on the treatment

Why you think the IASB decided on the treatment of "Loss on Discontinued Operations" and "Non-controlling Interest Allocation" that they did.

  What do you see as the intent behind section rules

From the shareholder's tax perspective do you think it would be better for a company to liquidate or reorganize? Explain your position. What do you see as the intent behind Section 332 rules?

  What is the companys break-even point in total sales dollars

What is the company's break-even point in total sales dollars? At the break-even point, how much of the company's sales are provided by each type of service?

  What is nanometrics required return

If the market return is expected to be 10.10 percent and the risk-free rate is 2.10 percent, what is Nanometrics' required return?

  What role do ethics play in market efficiency

Will market efficiency evolve on its own without government intervention? Why or why not and what role do ethics play in market efficiency?

  What did net for the corn

At that time, the Dec. 2017 corn futures price had fallen to $3.50/bushel and the basis was 20 under. What did he net for his corn?

  How can best get point across in an effective way

Research and discuss different presentation methods, such as PowerPoint, Prezi, Keynote, or others. Which one will you use? Why?

  Find what are corporate governance and ethics problems

Mary S, an independent petroleum geologist, has prepared a package, What are the corporate governance and ethics problems? Do not discuss legal problems!

  What is the value of the factory

A factory costs $510,000. You forecast that it will produce cash inflows of $155,000 in year 1, $215,000 in year 2, What is the value of the factory?

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