The level of the Syldavia market index is 21,600 at the start of the year and 26,100 at the end. The dividend yield on the index is 4.3%. a. What is the return on the index over the year? b. If the interest rate is 5%, what is the risk premium over the year? c. If the inflation rate is 7%, what is the real return on the index over the year? Note: For all requirements, do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. a. Return 25.13% b. Risk Premium 20.13% c. Real Return 12.27 %
The level of the Syldavia market index is 21,600 at the start of the year and 26,100 at the end. The dividend yield on the index is 4.3%. a. What is the return on the index over the year? b. If the interest rate is 5%, what is the risk premium over the year? c. If the inflation rate is 7%, what is the real return on the index over the year? Note: For all requirements, do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. a. Return 25.13% b. Risk Premium 20.13% c. Real Return 12.27 %
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:The level of the Syldavia market index is 21,600 at the start of the year and 26,100 at the end. The dividend yield on the index is 4.3%.
a. What is the return on the index over the year?
b. If the interest rate is 5%, what is the risk premium over the year?
c. If the inflation rate is 7%, what is the real return on the index over the year?
Note: For all requirements, do not round intermediate calculations and enter your answers as a percent rounded to 2
decimal places.
Answer is complete but not entirely correct.
a. Return
25.13%
b. Risk
Premium
20.13%
c. Real Return
12.27 %
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