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.

Question

Want to see the full answer?

Answer 1

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.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Moose Enterprises finds it is necessary to determine its marginal cost of capital. Moose’s current capital structure calls for 50 percent debt, 30 percent preferred stock, and 20 percent common equity. Initially, common equity will be in the form of retained earnings (Ke) and then new common stock (Kn). The costs of the various sources of financing are as follows: debt, 9.6 percent; preferred stock, 9 percent; retained earnings, 10 percent; and new common stock, 11.2 percent. a. What is the initial weighted average cost of capital? (Include debt, preferred stock, and common equity in the form of retained earnings, Ke.) b. If the firm has $18 million in retained earnings, at what size capital structure will the firm run out of retained earnings? c. What will the marginal cost of capital be immediately after that point? (Equity will remain at 20 percent of the capital structure, but will all be in the form of new common stock, Kn.) d. The 9.6 percent cost of debt referred to earlier…

7. Berkeley Farms wants to determine the minimum cost of capital point for the firm. Assume it is considering the following financial plans: Cost (aftertax) Weights Plan A Debt .................................. 4.0% 30% Preferred stock .................. 8.0 15 Common equity ................. 12.0 55 Plan B Debt .................................. 4.5% 40% Preferred stock .................. 8.5 15 Common equity ................. 13.0 45 Plan C Debt .................................. 5.0% 45% Preferred stock .................. 18.7 15 Common equity ................. 12.8 40 Plan D Debt .................................. 12.0% 50% Preferred stock .................. 19.2 15 Common equity ................. 14.5 35 a. Which of the four plans has the lowest weighted average cost of capital? Use the Kd (cost of debt) = Y(1 - T), Kp (Cost of preferred stock) = Dp/Pp - F, Ke = D1/P0 + g formulas or I will not understand.

Need use the Kd (cost of debt) = Y(1 - T), Kp (Cost of preferred stock) = Dp/Pp - F, Ke = D1/P0 + g formulas or I will not understand. Delta Corporation has the following capital structure: Cost Weighted (after-tax) Weights Cost Debt 8.1% 35% 2.84% Preferred stock (Kp) 9.6 5 .48 Common equity (Ke) (retained earnings) 10.1 60 6.06 Weighted average cost of capital (Ka) 9.38% a. If the firm has $18…

Answer 2

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.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

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.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

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.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

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.

Answer 6

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.

Answer 7

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.

Answer 8

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.

Answer 9

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.

Answer 10

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.

Answer 11

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.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

Ch. 10 - Investment Selection Given that Madrigal...Ch. 10 - Investment Selection Given that Sears was down by...Ch. 10 - Risk and Return We have seen that over long...Ch. 10 - Prob. 4CQ Ch. 10 - Effects of Inflation Look at Table 10.1 and Figure...Ch. 10 - Risk Premiums Is it possible for the risk premium...Ch. 10 - Prob. 7CQ Ch. 10 - Returns Two years ago, the Lake Minerals and Small...Ch. 10 - Prob. 9CQ Ch. 10 - Historical Returns The historical asset class...

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.

Solution Summary: The author explains how to compute the average return on large company stock and T-bills by dividing all the returns in different years by the number of years.

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.

Want to see the full answer?

Chapter 10 Solutions

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

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