Calculate the equity premium on the following set of data: Stock market return 10.2% Corporate bond return 7.1% Short-term t bills 3.7% Inflation 2.2% a. 6.50% b. 8% c. 7.83% d. 6.27%
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- Given the following calculate the Cost of Equity. Beta Equity Risk Premium Pre-tax Yield on Debt Return on the Bond Market Return on the Stock Market Risk Free Rate Tax Weight of Debt in the Total Capital Structure Weight of Equity in the Total Capital Structure 1.5 5.5% 6.0% 4.5% 8.0% 2.5% 25.0% 25.0% 75.0%Using the table below, Compute the convexity measure (in years) for bond 2 Bond 1 Bond 2 Coupon Yield to maturity Maturity (in years) Par value 6% 7% 6% 6% 4 $100 $100 $100 $108 Price O A. 14.763 12.652 OC. 13.312 OD. 13.927Selected information for Berry Company is as follows: Berrys return on equity rounded to the nearest percentage point is: a. 20%. c. 28%. b. 21%. d. 40%.
- GodoGiven correct answer financial accountingConsider the following simplified APT model: Factor Expected Risk Premium Market 6.4% Interest Rate -0.6% Yield Spread 5.1% Factor Risk Exposures Market Interest Rate Yield Spread Stock Stock (b1) (b2) (b3) P 1.0 -2.0 -0.2 P2 1.2 0 0.3 P3 0.3 0.5 1.0 a) Calculate the expected return for the above stocks. Assume risk free rate is 5%. Consider a portfolio with equal…
- A bond porfolio composition and spread durations of its components is listed in the table below: Sector % of portfolio (%) Spread duration Agencies 22.9 5.89 Industrials 19.1 8.11 Utilities 15.9 4.53 Financials 18.6 4.88 Treasury remainder 0.00 What is the portfolio's spread duration? EXCEL PLEASEIn a bond portfolio, the following are the present values of all cash flows by annual period: Year PV Cash flows (millions) 1 14.3 2 13.2 3 15.3 4 10.5 5 18.4 What is the percentage contribution to duration of the year 3 cash flows? Enter answer in percents.Assume the following Risk Premiums: DRP ? LP = 0.25% MRP =1.15% 10-year Government bonds yield 4.65% 10-year corporate bonds yield 6.75%. What is the default risk premium on corporate bonds?
- Calculate the annual interest (in $) and current yield (as a %) of the bond. (Round your percentage to one decimal place.) Company Coupon Rate Annual Interest Market Price Current Yield Company 5 7.25% $ 101.00 7.18%What is the current yield on a 11% bond with a current market price of $1230? Group of answer choices A. 10.57% B. 7.96% C. 8.94% D. 8.02% E. 6.12%Annual and Average Returns for Stocks, Bonds, and T-Bills, 1950 to 2019 Long-Term Treasury Bonds 6.6% 0.0 1.6 5.7 13.5 9.5 8.0 9.4 1950 to 2019 Average 1950 to 1959 Average 1960 to 1969 Average Average Average Average 1970 to 1979 1980 to 1989 1990 to 1999 2000 to 2009 2010 2011 Annual Return 2012 Annual Return 2013 Annual Return 2014 Annual Return 2015 Annual Return 2016 Annual Return 2017 Annual Return 2018 Annual Return 2019 Annual Return 2010 to 2019 Average 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Average Average Annual Return Standard deviation Portfolio Return % % % % % % % % % % % Stocks 12.7% % 20.9 8.7 7.5 18.2 19.0 0.9 15.1 2.1 16.0 32.4 13.7 1.4 12.0 21.8 -4.4 31.5 14.2 29.9 3.6 -12.7 25.1 -1.2 You have a portfolio with an asset allocation of 50 percent stocks, 36 percent long-term Treasury bonds, and 14 percent T-bills. Use these weights and the returns given in the above table to compute the return of the portfolio in the year 2010 and each year since. Then…
