Question

How would you find excess return using current four week tbill rates?

Answer #1

Excess returns are returns in excess of treasury bill rates (or
risk free rates). In other words the returns an investor can earn
by taking some risk, such returns will yield him returns above the
risk free rates (t-bill rates) because investors are risk averse
and wants to get compensated with **excess returns**
for the risk taken.

Ans: Lets say a US four week Treasury bill (or **4-week
t-bill**) is yielding 4%, and at the same time a similar
corporate bond provides a return of 5.5%.

The excess return on the corporate bond is 1.5% (5.5 - 4.0).

How do you compute 3 day excess return and two day excess
return?
Return Index
Market Index
109.2
5792.7
125
5801.7
130
5803.4

You run a regression of a stock's excess return on the market's
excess return. The resulting equation is: y = 0.6x +0.05, and the
R-squared is 0.48. (a) On average, how much did this stock price
change if the market rose 1%? (b) What is the proportion of this
stock's risk that is firm specific? (c) What does this model say is
the stock's expected return when the market is 0%? IF using Excel,
please show all steps.

How would a firm use exchange rate futures to lock in current
exchange rates?

Suppose the current T-bill rate is 2.75%, and our forecast for
the market excess return is 5.5%. We believe the beta of our
company's stock is 1.20. if we were to advise this company as to
their " hurdle rate " or discount rate for a project similar to the
risk of the company. The required or return for an investment with
the same risk as our company's equity would be?

2. The following
information (incremental rates of return ) on four mutually
exlusive projects is provided
below:
IRR (B - A)
85%
IRR (D - C)
25%
IRR (C - B)
30%
Assuming all projects have the
same life, which project would you choose
based on the IRR criteria at
MARR of 29%? Provide some reasoning behind your conclusion.

You complete an analysis of the fund DQXQ, and you expect an
excess return (return - risk free) of 14.0%. Your expectation of
the excess return of the market is 15.5%, and the beta of DQXQ is
0.85. You want to create an arbitrage portfolio to take advantage
of the mispricing with the following characteristics (Wp, Wmkt,
Wrf, alpha).
Group of answer choices:
100% ; -85% ; borrow ; 15% ; 0.83%
-100% ; 85% ; lend ; 15% ;...

You complete an analysis of the fund DQXQ, and you expect an
excess return (return - risk free) of 14.0%. Your expectation of
the excess return of the market is 13.3%, and the beta of DQXQ is
0.85. You want to create an arbitrage portfolio to take advantage
of the mispricing with the following characteristics (Wp, Wmkt,
Wrf, alpha).
Group of answer choices
100% ; -85% ; borrow ; 15% ; 2.70%
-100% ; 85% ; lend ; 15% ;...

26-) Based on current dividend yields and expected capital
gains, the expected rates of return on portfolios A and B are 11%
and 14%,respectively. The beta of A is .8 while that of B is 1.5.
The T-Bill rate is currently 6%, while the expected rate of return
of the S&P 500 Index is 12%. The standard deviation of
portfolio A is 10% annually, while that of B is 31%, and that of
the index is 20%.
a-) If you...

In this experiment you used an excess of the BaCl2 solution. How
would your results be affected if you did not use an excess of the
BaCl2 solution? Would this error cause your calculation of the mass
percent of sulfate in the unknown to be too high or too low?
Explain. In the last step of the procedure, you vigorously heated
the BaSO4 precititate wrapped in the filter paper in a crucible.
How would your results be affected if tiny...

During the last four years, a certain mutual fund had the
following rates of return:
Year
Rate of Return
2014
3.6%
2015
5.4%
2016
4.9%
2017
2.1%
At the beginning of 2014, Alice invested $2,318 in this fund. At
the beginning of 2015, Bob decided to invest some money in this
fund as well. How much did Bob invest in 2015 if, at the end of
2017, Alice has 25% more than Bob in the fund?
Round your answer to...

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