Over a 40-year period an asset had an arithmetic return of 10.4 percent and a geometric return
Question:
Over a 40-year period an asset had an arithmetic return of 10.4 percent and a geometric return of 8.8 percent. Using Blume's formula, what is your best estimate of the future annual returns over 5 years? 10 years? 20 years?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 80% (10 reviews)
To find the best forecast we apply ...View the full answer
Answered By
Zablon Gicharu
I am an educator who possesses the requisite skills and knowledge due to interacting with students for an extended period. I provide solutions to various problems in step-by-step explanations, a well-thought approach and an understandable breakdown. My goal is to impart more straightforward methodologies and understanding to students for more remarkable achievements.
5.00+
4+ Reviews
10+ Question Solved
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861704
11th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
Question Posted:
Students also viewed these Corporate Finance questions
-
Blumes Formula Over a 30-year period an asset had an arithmetic return of 12.8 percent and a geometric return of 10.7 percent. Using Blumes formula, what is your best estimate of the future annual...
-
Over a 40-year period an asset had an arithmetic return of 11.7 percent and a geometric return of 9.6 percent. Using Blumes formula, what is your best estimate of the future annual returns over 5...
-
Over a 30-year period an asset had an arithmetic return of 11.2 percent and a geometric return of 9.7 percent. Using Blumes formula, what is your best estimate of the future annual returns over 5...
-
A newly issued 20-year maturity, zero-coupon bond is issued with a yield to maturity of 8% and face value $1,000. Find the imputed interest income in the first, second, and last year of the bonds...
-
Montoya Co. uses the gross method to record sales made on credit. On June 1, 2008, it made sales of $40,000 with terms 3/15, n/45. On June 12, 2008, Montoya received full payment for the June 1 sale....
-
You are the new manager of the local GreatBuy Electronics store. Top management of GreatBuy Electronics is convinced that management training should include the active participation of store managers...
-
In 1970, Rose Mary Knick purchased 90 acres of land in Scott Township, Lackawanna County, Pennsylvania. In 2008, another resident of Scott Township discovered documents that suggested that one of...
-
Hank Itzek manufactures and sells homemade wine, and he wants to develop a standard cost per gallon. The following are required for production of a 50-gallon batch. 3,000 ounces of grape concentrate...
-
Solving via linear equation No unread replies.No replies. A small country exports soybeans and flowers. Soybeans require 8 workers per acre, flowers require 12 workers per acre, and 100,000 workers...
-
The dating web site Oollama.com requires its users to create profiles based on a survey in which they rate their interest (on a scale from 0 to 3) in five categories: physical fitness, music,...
-
Given the information in Problem 10, what was the average real risk-free rate over this time period? What was the average real risk premium? In Problem 10 Suppose the average inflation rate over this...
-
1. What advantages do the mutual funds offer compared to the company stock? 2. Assume that you invest 5 percent of your salary and receive the full 5 percent match from S&S Air. What EAR do you earn...
-
Explain what is meant by group bonus and state the objectives of introducing a group bonus schemes.
-
Based on Covid-19 crisis, discuss FOUR (4) communication strategies that are used by political leaders to carry out their roles to face the challenges. Provide a practical example for each strategy.
-
1. What bias is being used in the videos by Fox?
-
Choose a leader you see as inspirational. Provide FOUR (4) descriptions on how the leader uses emotional intelligence to inspire and motivate his followers. Support each description with an example.
-
How would you reconcile a question from an Internal Staff member who believes she or he is worth the same amount of pay than another who is Market Prices ABOVE that staff member?
-
How much interest would you pay if you borrowed $600 at 1% per month compounded monthly for 3 month? What percent of the principal is this interest amount%?
-
The Willson Center is a private not-for-profit entity. During 2020, it receives pledges of $600,000 that it expects to collect during 2021. Of that amount, 10 percent is viewed as conditional. Of the...
-
Assessing simultaneous changes in CVP relationships Braun Corporation sells hammocks; variable costs are $75 each, and the hammocks are sold for $125 each. Braun incurs $240,000 of fixed operating...
-
Sixx AM Manufacturing has a target debtequity ratio of .45. Its cost of equity is 13 percent, and its cost of debt is 6 percent. If the tax rate is 35 percent, what is the companys WACC?
-
Erna Corp. has 8 million shares of common stock outstanding. The current share price is $73, and the book value per share is $7. Erna Corp. also has two bond issues outstanding. The first bond issue...
-
In Problem 12, suppose the most recent dividend was $4.10 and the dividend growth rate is 6 percent. Assume that the overall cost of debt is the weighted average of that implied by the two...
-
Use an example of how you would use the recommendations for improving service quality prepare something similar using the recommendations listed. How would you recommend a plan to improve service...
-
A 10.0 L weather balloon is launched from ground level where the temperature was 230C and the pressure was 745 mmHg. Higher in the atmosphere, the balloon's volume became 15.0L at a pressure of...
-
1. Imagine that you need to determine the resistivity of a certain metal. You have several pieces of wire that are made from this material, all with a diameter of 0.361 mm. You make very precise...
Study smarter with the SolutionInn App