
Corporate Finance
12th Edition
ISBN: 9781259918940
Author: Ross, Stephen A.
Publisher: Mcgraw-hill Education,
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Question
Chapter 10, Problem 8QAP
A
Summary Introduction
Adequate information:
To compute: Average return on large company stock and T-bills
Introduction: Average return is defined as the average of all the returns earned during a period. It can be computed by dividing all the returns in different years by the number of years.
B
Summary Introduction
Adequate information:
Years | Large company stock returns (%) | T-bills returns (%) |
1973 | -14.69 | 7.29 |
1974 | -26.47 | 7.99 |
1975 | 37.23 | 5.87 |
1976 | 23.93 | 5.07 |
1977 | -7.16 | 5.45 |
1978 | 6.57 | 7.64 |
Total | 19.41 | 39.31 |
Average return | 3.24 | 6.55 |
To compute: The standard deviation for the returns.
Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.
C
Summary Introduction
Adequate information:
Years | Large company stock returns (%)(A) | T-bills returns (%)(B) | Risk premium (A-B) |
1973 | -14.69 | 7.29 | -21.98 |
1974 | -26.47 | 7.99 | -34.46 |
1975 | 37.23 | 5.87 | 31.36 |
1976 | 23.93 | 5.07 | 18.86 |
1977 | -7.16 | 5.45 | -12.61 |
1978 | 6.57 | 7.64 | -1.07 |
Total | 19.41 | 39.31 | -19.90 |
To compute: The average return and standard deviation.
Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.
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Chapter 10 Solutions
Corporate Finance
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