Question

Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock...

Assume these are the stock market and Treasury bill returns for a 5-year period:

Year Stock Market Return (%) T-Bill Return (%)
2013 35.60 0.20
2014 15.10 0.20
2015 −5.00 0.20
2016 16.70 0.07
2017 25.50 0.09

Required:

a. What was the risk premium on common stock in each year? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)

b. What was the average risk premium?

c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)

Homework Answers

Answer #1

Please rate Thumbs up

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock...
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) T-Bill Return (%) 2013 32.50 0.07 2014 11.80 0.07 2015 −2.40 0.07 2016 13.70 0.25 2017 22.40 0.27 Required: a. What was the risk premium on common stock in each year? b. What was the average risk premium? c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) Next Visit question...
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock...
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) T-Bill Return (%) 2011 −35.83 2.80 2012 30.00 1.30 2013 15.66 0.20 2014 2.08 0.05 2015 17.96 0.07 What was the standard deviation of the risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) 26.22 % is WRONG
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock...
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) T-Bill Return (%) 2011 −36.43 2.40 2012 29.20 0.80 2013 16.36 0.17 2014 1.68 0.09 2015 17.16 0.11 A. What was the standard deviation of the risk premium? (
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock...
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) T-Bill Return (%) 2011 −32.93 5.10 2012    32.80 1.40 2013    13.56 0.32 2014 4.98    0.09 2015 20.76 0.11 a. What was the risk premium on common stock in each year?  (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) b. What was the average risk premium? (Do not round intermediate calculations. Enter your answer...
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock...
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return T-Bill Return   Year 1 ? 33.03 5.00   Year 2 32.60 1.30   Year 3 13.66 .31   Year 4 4.88 .08   Year 5 20.66 .10 a. What was the risk premium on common stock in each year? (Negative amounts should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Year   Risk...
Assume these were the inflation rates and stock market and Treasury bill returns between 1929 and...
Assume these were the inflation rates and stock market and Treasury bill returns between 1929 and 1933: Year Inflation Stock Market Return T-Bill Return 1929 .1 –11.8 6.1 1930 –3.7 –30.6 3.8 1931 –8.5 –40.6 1.3 1932 –10.4 –9.3 1.0 1933 .5 57.2 .6 a. What was the real return on the stock market in each year? (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2...
Year Stock A Stock B Market 2012 11% 12% 15% 2013 18% 9% 11% 2014 5%...
Year Stock A Stock B Market 2012 11% 12% 15% 2013 18% 9% 11% 2014 5% 4% 6% 2015 -14% -7% -10% 2016 6% 3% 5% 2017 20% 13% 16% The table above shows the returns over the last six years. The risk free rate is currently 4% and the market risk premium is 6%. Calculate the betas for stocks A and B Calculate the required rates of return for stocks A and B If you created a portfolio with...
Observe the following returns over time: Year:                     Stock A:               
Observe the following returns over time: Year:                     Stock A:                Market: 2014                     18%                      14% 2015                     6%                         8% 2016                     23%                      12% Assume that the risk-free rate is 6% and the market risk premium is 5%. a)     What are the expected rates of return on Stock A and the market? b)     What is the standard deviation on Stock A and the market? c)     What is the Beta for Stock X given a correlation to the market of 0.8117? Is Stock A more or less...
6. Suppose the Treasury Bill risk-free rate = 9%, Stock Market return =14%, and Antivirus Inc.’s...
6. Suppose the Treasury Bill risk-free rate = 9%, Stock Market return =14%, and Antivirus Inc.’s stock beta = 1.3 a. What is the required return on Maxwell stock? b. If the expected inflation rate (Inflation Premium) increased by 1%, what is the effect on the Treasury Bill risk-free rate, Stock Market return, and required return on Maxwell stock c. Assume that the current trade war increases Market Risk Premium by 1%, what is the effect on the required return...
You are given the following information concerning a stock and the market: Returns Year Market Stock...
You are given the following information concerning a stock and the market: Returns Year Market Stock 2011 10 % 25 % 2012 10 10 2013 21 5 2014 −15 −30 2015 37 16 2016 15 17 a. Calculate the average return and standard deviation for the market and the stock. (Use Excel to complete the problem. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Market Stock Average Return Standard Deviation b. Calculate...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT