1.) suppose we have the following returns for large-company stocks

1.)      Suppose we have the following returns for large-company stocks and Treasury bills over a six year period:

Year

Large Company

US Treasury Bill

1

   3.66

4.66

2

  14.44

2.33

3

  19.03

4.12

4

–14.65

5.88

5

–32.14

4.90

6

  37.27

6.33


 

 

 

 

 

 

a.)      Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the arithmetic average risk premium over this period?

b.)      Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the standard deviation of the risk premium over this period?

 

2.)      You’ve observed the following returns on Yasmin Corporation’s stock over the past five years: 10 percent, –10 percent, 17 percent, 22 percent, and 10 percent.

a.        What was the variance of Yasmin’s returns over this period?

 

3.)      You bought one of Bergen Manufacturing Co.’s 5.2 percent coupon bonds one year ago for $1,055. These bonds make annual payments and mature fourteen years from now. Suppose you decide to sell your bonds today, when the required return on the bonds is 4 percent.

                 If the inflation rate was 3.4 percent over the past year, what would be your total real return on the                    investment?

 

4.)       You’ve observed the following returns on Yasmin Corporation’s stock over the past five years: 11 percent, –11 percent, 18 percent, 23 percent, and 10 percent. Suppose the average inflation rate over this period was 2 percent and the average T-bill rate over the period was 3.1 percent.

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

               What was the average real risk premium?

 

5.)      Suppose a stock had an initial price of $60 per share, paid a dividend of $.60 per share during the year, and had an ending share price of $53.

            Compute the percentage total return.

What was the dividend yield and the capital gains yield?

 

6.)     Suppose a stock had an initial price of $72 per share, paid a dividend of $2.60 per share during the year, and had an ending share price of $84.

Compute the percentage total return.

 

 

7.)     Suppose the returns on an asset are normally distributed. The historical average annual return for the asset was 7.5 percent and the standard deviation was 12.5 percent.

    What range of returns would you expect to see 95 percent of the time?

 95% level

[removed]%  

to

[removed]%  

 

What range would you expect to see 99 percent of the time?

 99% level

[removed]%  

to

[removed]%  

 

 

 







Calculate Your Essay Price
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more

Order your essay today and save 10% with the coupon code: best10