Over the past 100 years, the rate of return on stocks has averaged aboutafter adjusting for inflation.20%; 25%7%; 2%1%; 2%-10%; 5%and the return on bonds has averaged about

In terms of returns over the long run, equities have, on average, done better than bonds over the…

Answered: Over the past 100 years, the rate of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. ABC Corporation issued today a bond in favor of Mr. Barboncito and the bond has a face value of P1,000,000.00. Barboncito expects to earn at a bond rate of 7% and such bond matures six (6) years from today. If interest, i, equals 12% compounded yearly, a. What is the present value of the bond? b. The President of the corporation is bent on paying the yearly obligations to Barboncito, in addition to the yearly fund that the corporation has to set aside in anticipation of the maturity of the bond. How much then is the total yearly amount that the corporation has to prepare to meet its obligations?
The market consensus is that U.S. inflation will remain low, averaging 1% over the next 3 years. However you perceive that inflation may be higher than market estimates, averaging 2% per year. How would this affect the price you would be willing to pay for the bond?
Give correct typing answer with explanation and conclusion What are the strengths and weaknesses of investment performance of Foreign & Colonial Investment Trust PLC for 2019 to 2021.
Suppose a company just paid a dividend for RM0.30 and expects to increase dividendsby 3% per year. The required return is 8%. Calculate the value of the stock.
A bond has a face value of $15000 and pays an annual coupon rate of 7.2%. The bond is selling for $14990 now and is expected to be sold for $14800 one year from now. What is the bond's expected rate of return? Answer: % (DO NOT ROUND YOUR CALCULATIONS UNTIL YOU REACH THE FINAL ANSWER. ENTER YOUR RESPONSE ROUNDED TO TWO DECIMAL PLACES.)
Millon National Bank has 8 million British pounds (£) in one-year assets and £6 million in one- е. year liabilities. In addition, it has one-year liabilities of 3.5 million euros (€). Assets are earning 8 percent and both liabilities are being paid at a rate of 7 percent. All interest and principal will be paid at the end of the year. What is the net interest income in dollars if the spot prices at the end of the year for US $ to British £ are $1.30/£ and for Euro to US $ are €1.25/$
Stock in Synergistic Corporation is selling at $20 per share. It had earnings of $4 a share and a dividend yield of 4 percent. What is the dividend? a)$0.04 b)$0.20 c)$1.00 d)$120.
Buena Vision Clinic is considering an investment that requires an outlay of $600,000 and promises a net cash inflow one year from now of $810,000. Assume the cost of capital is 10 percent. Required: 1. Break the $810,000 future cash inflow into three components: a. The return of the original investment b. The cost of capital c. The profit earned on the investment 2. Now, compute the present value of the profit earned on the investment. 3. Compute the NPV of the investment. Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?
67- If expected earnings of a company are revised upward and all else is equal, the price of a stock will A- Fall B- Rise C- remain unchanged D- Adjust to reflect lower ratio of price to (current) earnings
Determinants of Interest Rate for Individual Securities A particular security's default risk premium is 3.10 percent. For all securities, the inflation risk premium is 2.10 percent and the real interest rate is 2.30 percent. The security's liquidity risk premium is .80 percent and maturity risk premium is 1.00 percent. The security has no special covenants. What is the security's equilibrium rate of return?

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Over the past 100 years, the rate of return on stocks has averaged about after adjusting for inflation. 20%; 25% 7%; 2% 1%; 2% -10%; 5% and the return on bonds has averaged about