Homework Answers
Answer: Option B is correct.
Real return=(1+Nominal return)/(1+Inflation rate)-1
Real return=(1+8.9%)/(1+2.7%)-1
=1.089/1.027-1
=0.06037 or 6% (Rounded to the nearest whole number)
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14. Over the last 5 years, the average nominal rate of return of 90 day Treasury...
Can you please help me figure out how the answer is B using a formula. 14....
Can you please help me figure out how the answer is B using a
formula.
14. Over the last 5 years, the average nominal rate of return of 90 day Treasury bills was 1.02%, Saltine Co.'s average nominal stock return was 8.9%, large company stocks average nominal return was 15%, and the inflation rate averaged 2.7%. The real rate of Saltine's stock return is A) 6.8%. B) 6.0%. C) 5.1%. D) 4.3%. Answer: B
11. A zero coupon bond is selling for $476. The bond has a face value of...
11. A zero coupon bond is selling for $476. The bond has a face value of $1,000 and matures in 8 years. Your friend asks you if he should buy the bond. He tells you his required return is 9 percent. Would you recommend he buy the bond or not? Explain your answer. 12. Assume that you have $330.000 invested in a stock that is retuming 11.50%, $170,000 invested in a stock that is returning 22.75%, and $470,000 invested in...
4) (4 pts) Given the average return on the following Investments over the last 50 years:...
4) (4 pts) Given the average return on the following Investments over the last 50 years: Large Company Stocks Long-term Corporate Bonds Long term Government Bonds US Treasury Bills Inflation 50 year average 50 year average = 6.2% 50 year average 5.7% 50 year average: 3.5% 50 year average: 2.2% 9.4% What was the average historical risk premium for Large Company Stocks over the last 50 years? 8 What was the average historical real rate of return for Large Company...
If the average return on common stocks was 13.3%, the average Treasury bill rate was 3.8%,...
If the average return on common stocks was 13.3%, the average Treasury bill rate was 3.8%, and the average inflation rate was 3.2% what would be the expected nominal and approximate real market return for common stocks if the Treasury bill rate is expected to be 5.5% and the inflation rate is 4.1%? 14 6%, 9.1% 9.5%, 13.6% 13.6%, 9.5% 15,90%, 10.9%
The following table shows the average nominal interest rates on six-month Treasury bills between 1963 and 1967
The following table shows the average nominal interest rates on six-month Treasury bills between 1963 and 1967, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 1963 to 1967. (All rates are rounded to the nearest tenth of a percent.) YearNominal Interest Rate (Percent)Inflation Rate(Percent)19633.31.319643.71.319654.11.619665.12.919674.63.1On the following graph, use the orange points (square symbol) to plot the nominal interest rates for the years 1997 to 2001. Next,...
14 Over the last one hundred years a. long term government bonds have outperformed large company...
14 Over the last one hundred years a. long term government bonds have outperformed large company stocks b long term government bonds have outperformed Treasury bills c interest income plus operating income d Inflation has been higher than long-term government bonds 15 Let's say a company's stock price falls significanlty immediatley after reports of dissapointing sales during the period are announced. This best describes a. strong form market efficiency b weak form market efficiency c neutral form efficient d volatile...
Large-cap stocks had the nominal rates of return of 6.65 percent. The rate of inflation during...
Large-cap stocks had the nominal rates of return of 6.65 percent. The rate of inflation during the last year was 2.00 percent. What is the real rate of return for large-cap stocks? Round the answer to two decimal places in percentage form.
Note the return series below and answer the following questions 1. What is the average nominal...
Note the return series below and answer the following
questions
1. What is the average nominal return earned on large company
stocks? (Enter percentages as decimals and round to 4 decimal
places)
2. What is the average real return earned on large company stocks?
(Enter percentages as decimals and round to 4 decimal places)
3. What is the average risk premium earned on large company
stocks? (Enter percentages as decimals and round to 4 decimal
places)
4. What is the...
Large-cap stocks had the nominal rates of return of 13.10 percent. The rate of inflation during...
Large-cap stocks had the nominal rates of return of 13.10 percent. The rate of inflation during the last year was 3.89 percent. What is the real rate of return for large-cap stocks? Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)
The following table shows the average nominal interest rates on six-month Treasury bills between 1971 and...
The following table shows the average nominal interest rates on
six-month Treasury bills between 1971 and 1975, which determined
the nominal interest rate that the U.S. government paid when it
issued debt in those years. The table also shows the inflation rate
for the years 1971 to 1975. (All rates are rounded to the nearest
tenth of a percent.)
Year
Nominal Interest Rate
Inflation Rate
(Percent)
(Percent)
1971
4.5
4.2
1972
4.5
3.3
1973
7.2
6.3
1974
8.0
11.0
1975...
Can you please help me figure out how the answer is B using a
formula.
14. Over the last 5 years, the average nominal rate of return of 90 day Treasury bills was 1.02%, Saltine Co.'s average nominal stock return was 8.9%, large company stocks average nominal return was 15%, and the inflation rate averaged 2.7%. The real rate of Saltine's stock return is A) 6.8%. B) 6.0%. C) 5.1%. D) 4.3%. Answer: B
11. A zero coupon bond is selling for $476. The bond has a face value of $1,000 and matures in 8 years. Your friend asks you if he should buy the bond. He tells you his required return is 9 percent. Would you recommend he buy the bond or not? Explain your answer. 12. Assume that you have $330.000 invested in a stock that is retuming 11.50%, $170,000 invested in a stock that is returning 22.75%, and $470,000 invested in...
4) (4 pts) Given the average return on the following Investments over the last 50 years: Large Company Stocks Long-term Corporate Bonds Long term Government Bonds US Treasury Bills Inflation 50 year average 50 year average = 6.2% 50 year average 5.7% 50 year average: 3.5% 50 year average: 2.2% 9.4% What was the average historical risk premium for Large Company Stocks over the last 50 years? 8 What was the average historical real rate of return for Large Company...
If the average return on common stocks was 13.3%, the average Treasury bill rate was 3.8%, and the average inflation rate was 3.2% what would be the expected nominal and approximate real market return for common stocks if the Treasury bill rate is expected to be 5.5% and the inflation rate is 4.1%? 14 6%, 9.1% 9.5%, 13.6% 13.6%, 9.5% 15,90%, 10.9%
14 Over the last one hundred years a. long term government bonds have outperformed large company stocks b long term government bonds have outperformed Treasury bills c interest income plus operating income d Inflation has been higher than long-term government bonds 15 Let's say a company's stock price falls significanlty immediatley after reports of dissapointing sales during the period are announced. This best describes a. strong form market efficiency b weak form market efficiency c neutral form efficient d volatile...
Note the return series below and answer the following
questions
1. What is the average nominal return earned on large company
stocks? (Enter percentages as decimals and round to 4 decimal
places)
2. What is the average real return earned on large company stocks?
(Enter percentages as decimals and round to 4 decimal places)
3. What is the average risk premium earned on large company
stocks? (Enter percentages as decimals and round to 4 decimal
places)
4. What is the...
Large-cap stocks had the nominal rates of return of 13.10 percent. The rate of inflation during the last year was 3.89 percent. What is the real rate of return for large-cap stocks? Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box)
The following table shows the average nominal interest rates on
six-month Treasury bills between 1971 and 1975, which determined
the nominal interest rate that the U.S. government paid when it
issued debt in those years. The table also shows the inflation rate
for the years 1971 to 1975. (All rates are rounded to the nearest
tenth of a percent.)
Year
Nominal Interest Rate
Inflation Rate
(Percent)
(Percent)
1971
4.5
4.2
1972
4.5
3.3
1973
7.2
6.3
1974
8.0
11.0
1975...
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