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1 the risk-free rate is 6 the expected rate of return on the stock market is 10 what is the appropriate cost of capital
1 what would it take for a bond to have a larger risk premium than default premium2 a corporate zero-bond promises 7 in
1 explain the basic schools of thought when it comes to equity premium estimation2 if you do not want to estimate the
an unlevered firm has an asset market beta of 15 the risk-free rate is 3 the equity premium is 4a what is the firms
1 you estimate your project to return -20 if the stock market returns -10 and 5 if the stock market returns 10 what
consider the following assetsa compute the market betas for assets x and yb compute the correlations of assets x and y
the following represents the probability distribution for the rates of return for next monthprobabilitypfio p market
download the historical prices for the sampp 500 index spx or gspc and for vpacx the vanguard pacific stock index
download 5 years of historical monthly dividend-adjusted prices for coca-cola ko and the sampp 500 from yahoo financea
1 are historical covariances or means more trustworthy as estimators of the future2 why do some statistical packages
lets consider a stock market index such as the sampp 500 it had a historical average rate of return of about 12 per
1 if there are two risky portfolios that have a correlation of -1 with positive investment weights what would the
if h and i were more correlated what would the efficient frontier between them look likeif h and i were less or more
formula noted that the minimum-variance portfolio without a risk-free asset invests about 762 in h and about 248 in i
1 would the tangency portfolio invest in more or less h if the risk-free rate were 3 instead of 4 hint think visually2
1 broadly speaking what was the average risk of cash bonds and stocks what time period are your numbers from2 how good
1 explain the differences between a market order and a limit order2 what extra function do retail brokers handle that
1 is nasdaq a crossing market2 what are the two main mechanisms by which a privately held company can go public3 when
1 what happens if you compute the average deviation from the mean rather than the average squared deviation from the
1 you estimate your project x to return -5 if the stock market returns -10 and 5 if the stock market returns 10 what
lets check that the beta combination formula is correct let me lead you alonga write down a table with the rate of
lets confirm that you cannot take a value-weighted average of component variances and thus of standard deviations the
consider an investment of 23 in c and 13 in dcall this new portfolio ccdcompute the variance standard deviation and
assume that a firm will always have enough money to pay off its bonds so the beta of its bonds is 0 being risk free the
multiply each rate of return for a by 20 this portfolio offers -2 4 8 and 22compute the expected rate of return and