Over the long-run LR Corp has a 10% historical return and the long-run t-bill rate is...
Over the long-run LR Corp has a 10% historical return and the long-run t-bill rate is 3% over the same amount of time. If the current t-bill rate is 1%, what is the current expected return on LR Corp?
Homework Answers
Current expected return = Historic long run return + Difference between Long run T bill rate and Current T bill rate.
= 10 % + (3 % - 1 %)
= 10 % + 2 %
= 12 %.
Conclusion :- Current expected return = 12 %.
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Over the long-run LR Corp has a 10% historical return and the
long-run t-bill rate is...
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For Problems 10 through 12: Consider historical data showing that the average annual rate of return on the S&P 500 portfolio over the past 90 years has averaged roughly 8% more than the Treasury bill return and that the S&P 500 standard deviation has been about 20% per year. Assume these values are representative of investors' expectations for future performance and that the current T-bill rate is 5% 10. Calculate the expected return and variance of portfolios invested in T-bills...
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