Use the data in Tables 11.1 and 11.4 to answer these questions: Table 11.1 Table 11.4 a.

Question:

Use the data in Tables 11.1 and 11.4 to answer these questions:

Table 11.1

Table 11.4

a. What was the average rate of return on large U.S. common stocks from 1900 to 2017?

b. What was the average risk premium on large stocks?

c. What was the standard deviation of returns on the market portfolio?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For answer-question

Fundamentals of Corporate Finance

ISBN: 978-1260566093

10th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

See More Books

Question Posted: Oct 29, 2019 11:02 AM

See More Questions

Table indicates that the average annual rate of return on common stocks over many years has exceeded the return on government bonds in the United States. Why do we observe this pattern? Security...
What is the nominal rate of return on a preferred stock with a $100 par value, a stated dividend of 8% of par, and a current market price of (a) $60, (b) $80, (c) $100, and (d) $140?
What is the required rate of return on a preferred stock with a $50 par value, a stated annual dividend of 7% of par, and a current market price of? (a) $30, (b) $40, (c) $50, (d) $70 (Assume the...
Explain why a decline in investment spending caused by a change in business expectations leads to a fall in consumer spending.
Your company has purchased a large new truck-tractor for over-the-road use (asset class 00.26). It has a cost basis of $180,000. With additional options costing $15,000, the cost basis for...
How are diversity and innovation related?
Douglas Singletary purchased a mobile home from P&A Investments, Inc. d/b/a Andys Mobile Home and Land Sales. On November 17, 2007, Singletary entered in a sales agreement with Andys to purchase a...
Presented below is an aging schedule for Sycamore Company. At December 31, 2014, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $9,000. Instructions (a) Journalize and post...
Development economics studies the transformation of emerging nations into more prosperous one and it seeks to understand and shape the country's macro and microeconomics policies in order to lift...
A baked potato smothered with cheddar cheese weighs 180 grams and contains 10.5 grams of protein. If cheddar cheese contains 25% protein and a baked potato contains 2% protein, how many grams of...
A financial analyst has computed both accounting and NPV breakeven sales levels for a project using straight-line depreciation over a 6-year period. The project manager wants to know what will happen...
Here are rates of return on a broad stock market index and on Treasury bills between 2013 and 2017: a. What was the risk premium on common stock in each year? b. What was the average risk premium? c....
How will your answer change if the discount rate you use is increased by 0.5% (50 basis points)? Decreased by 0.5%? Comment. Both Sprint and Nextel started business on the competitive fringes of the...
Define computer hacking and cracking, and explain how they undermine resource security.
What is IT governance?
What is the order entry/sales (OE/S) process?
What steps are commonly included in a business continuity planning methodology?
Discuss how customer relationship management (CRM) systems aid a customer service representative (CSR) in providing service to customers.
Journalize, record, and post when appropriate the following transactions in the general journal (all sales carry terms of 5/10, n/30): 201X Dec. 16 Sold merchandise on account to Cart Co., invoice...
Wholesalers Ltd. deals in the sale of foodstuffs to retailers. Owing to economic depression, the firm intends to relax its credit policy to boost productivity and sales. The firms current credit...
Alpha Coip, and Beta Corp. both produce turbo encabulators. Both companies' assets and operations are growing at the same rate, and their annual capital expenditures are about the same. However,...
Scan the Beyond the Page icon in the margin on page 483 to read about Sealed Air's restructuring. What was the value of financial slack to Sealed Air before its restructuring? What does the success...
MM's proposition 1 suggests that in the absence of taxes it makes no difference whether the firm borrows on behalf of its shareholders or whether they borrow directly. However, if there are corporate...
Identify a contemporary issue concerning freedom of expression under the First Amendment, and discuss the most likely future scenarios, referencing both historical analogs and case law.?
You took out a loan to buy equipment for your new business. The annual interest rate is 1 8 % . You have to pay $ 2 5 0 every month for 6 0 months. What is the present value of the cash flows if it's...
what ways does the author employ narrative perspective to convey multiple layers of meaning?

Use the data in Tables 11.1 and 11.4 to answer these questions: Table 11.1 Table 11.4 a.

Question:

Average Premlum (Extra return versus Average Annual Rate of Return Portfollo Treasury blls) Portfollo Treasury bills Treasury bonds Common stocks 3.8% 3.8% 5.3 1.5% 11.5 7.7 Portfollo Standard Devlation (%) Treasury bills Long-term government bonds Common stocks 2.9 9.0 19.7

Step by Step Answer:

a For the period 19002017 average rate of ...View the full answer

Fundamentals of Corporate Finance

Related Video

Students also viewed these Business questions