According to Investopedia, from 199x until 199y, big-company stocks earned a mean return of 12.34% whereas little-company stocks earned 17.25%. If the mean return on U.S. T-bills during this period was 2.53%, the risk premium on little-company stocks was a. 4.91% b. 19.78% c. 14.72% d. 11.78% e. 9.81%

Q: 1 0.2 0.3 2 0.10 0.1 3 0.14 0.18 4 0.05 0.00 5 0.01 -0.08 i. Calculate the arithmetic average return…

A: Arithmetic average can be calculated by sum of all divided by number of returns.

Q: What is the approximate and exact nominal rate of return on the common stock of Mountain Unequipped…

A: The approximate rate of return is the unadjusted rate of return that an investment provides to its…

Q: 06-1.jpg = $1.50, g (which is constant) = 5.6%, and Pmc006-2.jpg = $56, what is the stock’s expected…

A: Required rate on stock is in two ways One is dividend yield and the another is capital gain yield…

Q: The following four macro-economic factors were identified regarding a stock As returns, the stock…

A: Expected rate of return using four macro-economic factors of the Arbitrage pricing theory is…

Q: Bradford manufacturing company has abta of 1.45 while Farley industries has abeta of 0.85 the holds…

A: Computations as follows:

Q: Johnson & Johnson Walgreen Company E [R] 7.2% 10.3% SD [R] 16.4% 19.5% a portfolio that is equally…

A: GIVEN,

Q: -company stocks Small-company stocks Long-term corporate bonds Long-term government bonds…

A: The expected return of the stock signifies the average return that the investor receives.The…

Q: If the current rate on U.S. Treasuries are 5.3% and the current rate on stocks are 8%, then what is…

A: In this question, we are required to determine the risk premium.

Q: Please answer both questions What is the risk premium for the stock in the table below? The risk…

A: Risk premium of a stock = Beta of the stock x Market Risk premiumBeta of the stock = 1.05Market Risk…

Q: The following table shows the sensitivity of four stocks to the three Fama-French factors. Assuming…

A: Risk premium is an element that denotes the excess returns that an investor is looking forward to…

Q: The common stock of Pittsburgh Steel Products has a beta of 1.2 and a standard deviation of 9.75…

A: Risk-free rate = 3%Market return = 12.2%Beta = 1.2Standard deviation = 9.75%

Q: If the yearly geometric mean of the stock risk premium is 9.4%, how much of the equity risk premium…

A: Equity risk premium is the difference between average return on stocks and the average return on…

Q: Over the past four years, large-company stocks and U.S. Treasury bills have produced the returns…

A: Here,

Q: Over the past 4 years, large-company stocks and U.S. Treasury bills have produced the returns stated…

A: real rate of return=1+nominal rate of return1+inflation-1.....(1)

Q: Last year, your investment in large-company stocks earned an average of 6 percent while T-bills…

A: The correct answer to the question is "Risk premium".According to the Capital Asset Pricing Model…

Q: None

A: The Capital Asset Pricing Model (CAPM) is a widely used model in finance to estimate the expected…

Q: Year 1 2 3 4 5 6 Stocks -15.69% -26.77 37.43 24.13 - 7.56 6.77 Treasury Bills 7.49% 8.09 6.07 6.07…

A: Standard deviation is a statistical measure of the amount of variability or dispersion in a set of…

Q: The standard deviation of returns of a particular stock is 43% and that of the market is 35%. The…

A: Beta measures the market risk of any stock. A beta can be negative, positive, 0 or 1. A beta of 1…

Q: Suppose we have the following returns for large-company stocks and Treasury bills over a six-year…

A: Step 1: a) Large Company Stocks: Average Return = (0.0391 + 0.1435 + 0.1929 - 0.1439 - 0.3188 +…

Q: Assume the average return on utility stocks was 8.9% over the past 40 years. �If the average return…

A: Risk premium is the excess return earned by an investor for taking on additional risk above the…

Q: returns is 57% and the standard deviation of stock Z's annual return is 49%. The retu

A: Due to diversification the risk is reduced very much but the reduction of risk depends on…

Q: Maria Kajia is now evaluating company XYZ. The risk-free rate to be 3.65%, yield on company XYZ…

A: The Weighted Average Cost of Capital (WACC) is commonly referred as organization/ company/firm's…

Q: State Prob. of State A B C Boom 20% 0.27 0.22 0.16 Good 45% 0.16 0.09 0.07 Poor 25% 0.03 0 0.03 Bust…

A: Standard deviation is measure of risk and volatility of the stock and is measured as deviation from…

Q: In a year in which corporate bonds offered an average return of 9%, treasury bonds offered an…

A: Market risk premium is the difference between the expected return of the stock and the risk free…

Q: If the average return on common stocks was 13.3%, the average Treasury bill rate was 3.8%, and the…

A: Nominal rate of Return = 15.90% Real rate of return = 10.90% Explanation:Nominal rate of Return =…

Q: The average risk premium on large-company stocks for the period 1926-2018 was:   Multiple Choice…

A: Risk premium is the difference between market return and risk-free rate. The average risk premium is…

Q: The distribution of returns for which one of the following for the period of 1926-2006 produces the…

A: The distribution of returns for different asset classes can be compared based on their standard…

Q: Investment bankers at Cowen & Co. announced that the stock of Planet Fitness (ticker: PLNT) has a…

A: Introduction US T bills: These are the government-issued securities, promised with a risk-free…

Q: 8) Which of the following is a statement of semi-strong form efficiency? I) Stock prices will adjust…

A: Efficient market theory (EMT) is a financial approach which states that the stock of a company…

Q: average excess return earned by long-term government bonds and small company stocks respectively?

A:

Q: IIII. 4. The following table shows the rate of returns for large company stocks and Treasury bills…

A: Part 2: Explanation:Step 1: Calculating the risk premium for each year- For each year, subtract the…

Q: Olmsted Inc. has a beta of 1.38. The T-Bill rate is 3.87%, the rate of inflation is 3.93%, and the…

A: CAPM refers to the method of calculating the expected return of a stock based on the level of…

Q: your risk-aversion coefficient is A = 3./ and you believe that the entire 1927-20 period is…

A: Two fundamental concepts in finance are risk and return. The dangers of loss and uncertainty…

Q: Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities shown…

A: A portfolio consists of two or more financial assets. In this case the financial asset is in the…

Q: how do you calculate a stocks average monthly return,its return variance ,standard deviation and…

A: Variance is a measure of risk of returns, it shows how much actual return has deviated from its…

Q: Consider the following sample of annual holding period returns on Masco (a corporation) and the…

A: The unpredictability or fluctuation of investment results is referred to as risk. Investments with a…

Q: The Motley Fool just reported that the stock of Curaleaf Holdings (ticker: CURLF) has an E(R) =…

A: Risk Free Rate = 2.95% Expected Return on stock = 11.73% Reward-to-risk ratio = 7.4% Beta = ?

Q: US-listed company’s common stock has a beta of 1.35. If the market risk premium is 13 percent and…

A: Here the risk free rate is not given and hence we will first have to find the risk free rate. Then…

Q: The stock of Eaton Corporation (ticker: ETN) has an E(R) = 9.3% and a reward-to-risk ratio = 6.32%.…

A: Reward to risk ratio = (expected return - risk free rate) / beta.

Q: You know that the return of Carla Vista Cyclicals common shares is 1.6 times as sensitive to…

A: Here, Beta is 1.6 Risk Free Return is 2.80% Market Risk Premium is 5.71%

Q: The standard deviation of Nvidia's stock return is 14.004%. For AMD it is 17.035% and for the market…

A: Plug the values into the…

Q: Suppose Johnson & Johnson and the Walgreen Company have the expected returns and volatilities shown…

A: The expected return of a portfolio refers to the weighted average profit of the constituent stocks…

Q: What does Beta measure and how is it interpreted? Explain the beta values of TSLA and JPM by…

A: In the financial market, the risk is categorized into two parts one is systematic and the second is…

Q: Consider the following table for different assets for 1926 through 2020. Standard Deviation 19.7%…

A: The expected return of the stock signifies the average return that the investor receives. The…

Q: a) Historical nominal returns for Coca-Cola have been 8% and -20%. The nominal returns for the…

A: “Since you have asked multiple questions, we will solve the one question for you. If you want any…

Q: Review the following market information: Current Stock Market Return                    11.25%…

A: As per CAPM, Required Return = Risk free Rate + Beta * (Market return - risk free rate) where, Risk…

Q: Consider the following information on large-company stocks for a period of y Arithmetic Mean 12.7%…

A: Arithmetic Mean =12.70%Inflation rate-3.3%Required:Arithmetic average annual return in nominal…