In 2000, the S&P 500 Index earned -9.1 percent while the T-bill yield was 5.9 percent. Does this mean the market risk premium was negative? Explain.
Answer to relevant QuestionsDescribe how adding a risk-free security to modern portfolio theory allows investors to do better than the efficient frontier. Describe a stock market bubble. Can a bubble occur in a single stock? Determine what level of market efficiency each event is consistent with:a. Immediately after an earnings announcement the stock price jumps and then stays at the new level.b. The CEO buys 50,000 shares of his company and the ...Compute the expected return and standard deviation given these four economic states, their likelihoods, and the potentialreturns:Universal Forest’s current stock price is $57.50 and it is likely to pay a $0.26 dividend next year. Since analysts estimate Universal Forest will have a 9.5 percent growth rate, what is its required return?
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