The following data shows the rate of return on stocks and bonds for several recent years. Calculate
Question:
Year2002 Return on stocks% -20.9 Return on bonds (%) 17.8 Risk premium (%) 2003 31.6 1.4 2004 12.5 2005 6.4 7.8 8.5
Step by Step Answer:
The risk premiums are 387 302 40 and 14 Overall the average ...View the full answer
Introduction to Corporate Finance
ISBN: 978-0324657937
2nd edition
Authors: Scott B. Smart, William L Megginson
Related Video
Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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