Search: finance (risk premium)

Number of results: 5,603

Finance
If 10 year T bonds have a yield of 5.2%, 10 year corporate bonds yield 7.5%, the maturity risk premium on all 10 year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T bonds, what is the default risk premium on the corporate...
Wednesday, October 21, 2009 at 12:56am by Magnate

finance (risk premium)
The risk premium is likely to be highest for? A. U.S. government bonds B. corporate bonds C. gold mining expedition D. either B or C I like C. I think th risk premium the rate added to the risk free rate would be highest for a gold mining expedition.
Saturday, July 26, 2008 at 4:38am by Jason

Finance
A stock has an expected return of 10 percent, the risk-free rate is 6 percent, and the market risk premium is 5 percent. The beta of this stock must be . Note that the market risk premium is given.
Saturday, April 28, 2012 at 11:49pm by angiza

finance
nominal risk free rate for 10 years = 3.7 + 1.5 = 5.2 nominal risk free rate for 30 years = 4.0 + 1.5 = 5.5 Thus maturity risk premium is 5.5 - 5.2 = 0.3% It is basically premium for holding bond for longer duration.
Friday, January 27, 2012 at 7:24pm by Expert Ace

finance (risk premium)
The risk premium is likely to be highest for A. U.S. government bonds B. corporate bonds C. gold mining expedition D. either B or C I like C the gold mining expedition I that correct??
Friday, July 25, 2008 at 1:59pm by Jason

Finance
Suppose the market risk premium is 6.5% and the risk-free interest rate is 5%. Calculate the cost of capital of investing in a project with a beta of 1.2.
Monday, August 2, 2010 at 11:13pm by Anonymous

Managerial Finance
Assume that investors have recently become more risk averse, so the market risk premium has increased. Also, assume that the risk-free rate and expected inflation have not changed. Which of the following is most likely to occur? A. The required rate of return for an average ...
Sunday, January 30, 2011 at 7:50pm by Alex

Investing
Kelly Inc's 5 yr bond yield 7.50% and 5 yr T Bonds yield 4.50%.The risk free rate is r*=2.5, the default risk premium for kelly bonds is DRP=0.40%, the liquity premium on kelly's bond is LP=2.6% versus zero on T-bonds, and the inflation premium ( IP) is 1.5%. What is ...
Wednesday, July 22, 2009 at 4:17pm by Alex

Finance
Interest rate premiums A 5-year Treasury bond has a 5.2 percent yield. A 10-year Treasury bond yields 6.4 percent, and a 10-year corporate bond yields 8.4 percent. The market expects that inflation will average 2.5 percent over the next 10 years (IP10 _ 2.5%). Assume that ...
Saturday, September 15, 2007 at 9:14pm by Mel

finance (risk premium)
The correct answer is "C"
Friday, July 25, 2008 at 1:59pm by Frank

Finance
In February 2011 the risk-free rate was 4.50 percent, the market risk premium was 7.00 percent, and the beta for Dell stock was 1.50. What is the expected return that was consistent with the systematic risk associated with the returns on Dell stock
Monday, February 25, 2013 at 3:59pm by elh009

finance
If you expect the inflation premium to be 2%, the default risk premium to be 1%, and the real interest rate to be 4%, then what interest rate would you expect to observe in the marketplace on short-Term Treasury Securities?
Sunday, March 13, 2011 at 4:16pm by dominic

Finance
What is the relatiomship between the required risk premium on a portfolio and the price at which the portfolio will sell? Like as the required premium increases, will the price be higher or lower?
Tuesday, September 30, 2008 at 8:05pm by Blake

Finance
risk free rate 5.5% market premium 6% beta 0.8 expected dividend $1.00 common stock $25.00 growth 6% bond yeild 6.5% capital struture 25% debt 15% preferred stock 60% common equity tax rate 40% preferred stock price $95 preferred dividend $11. what firm cost of equity using ...
Friday, November 30, 2012 at 12:01am by lora

Finance
kollo enterprise has beta 0.82 real risk freerate 2.00% investors expected 3.00% future inflation rate, market risk premium is 4.70% what kollo's required rate of return?
Sunday, December 9, 2012 at 2:00pm by lora

Economics
If 10-year T-bonds have a yield of 5.2%, 10-year corporate bonds yield 7.5%, the maturity risk premium on all 10-year bonds is 1.1%, and corporate bonds have a 0.2% liquidity premium versus a zero liquidity premium for T-bonds, what is the default risk premium on the corporate...
Saturday, August 15, 2009 at 9:28am by Anonymous

Managerial Finance
The real risk-free rate is 2.1%. Inflation is expected to be 2.2% this year, 3.95% next year, and then 3.05% thereafter. The maturity risk premium is estimated to be 0.05(t - 1)%, where t = number of years to maturity. What is the yield on a 7-year Treasury note? Round your ...
Friday, September 23, 2011 at 8:55pm by SLW

Finance
IBM's common stock has a beta of 0.85. If the expected risk-free return is 4.5% and the market risk premium is 7%. a) Calculate IBM’s required rate of return (10pts) b) Assume IBM’s actual realized return is 15%. Calculate its abnormal return (i.e. alpha). (5pts)
Monday, November 28, 2011 at 6:23pm by Anonymous

Investments/Portfolio Mgt
How would the following be solved... Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $50,000 or $150,000, with equal probabilities of 0.5. The alternative riskless investment in T-bills pays 5%. a. If you require a risk premium ...
Monday, November 10, 2008 at 1:08pm by Anna

Corporate Finance
The T-bill rate is 6 percent and the market risk premium is 8 percent, the expected return is 9%, the beta is .3 what is the specific benchmark?
Sunday, July 22, 2012 at 1:49pm by Nicole

Finance
Is the return measure an investor demands for giving up current use of funds without adjusting for purchasing power or the real rate of change is the premium risk?
Monday, December 11, 2006 at 1:46pm by susan

Finance
Answers for a 10 year us treasury bond has a 3.50 % interest rate, while a same maturity corporate bond has a 5.25 % interest rate. Real interest rates and inflation rate expectations would be for the two bonds. if default risk premium of 1.50 percentage points is estimated ...
Wednesday, May 2, 2012 at 11:12pm by Ann

Finance
Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $70,000 or $200,000 with equal probabilities of 0.5. The alternative risk-free investment in T-bills pays 6 percent per year. a) If you require a risk premium of 12 percent, how ...
Tuesday, September 30, 2008 at 8:00pm by Blake

Finance
Rollincoast Incorporated issued BBB bonds two years ago that provided a yield to maturity of 11.5%. Long-term risk-free government bonds were yielding 8.7% at that time. The current risk premium on BBB bonds versus government bonds is half of what it was two years ago. If the ...
Wednesday, October 14, 2009 at 11:25am by Ms. Douglas

Finance
using the CAPM, compute the expected rate of return for a portfolio with 25% stake in company A and 75% stake in company B. Assume a market risj premium of 3% and a risk free rate of 4%.
Saturday, June 4, 2011 at 4:04pm by Anonymous

finance management
Suppose a firm estimates its cost of capital for the coming year at 10%, what are reasonable costs of capital for evaluating average-risk, high-risk, and lo-risk projects?
Friday, January 25, 2008 at 8:14am by angie

MGT 437
Which one of the following is not a project risk? a)Political Risk b) Department Risk c) Technical Risk d) Schedule Risk e) Production Risk
Saturday, November 5, 2011 at 12:33am by Joe

Business Finance
Firms exposed to the risk of interest rate changes may reduce that risk by doing what
Sunday, February 14, 2010 at 3:24pm by mike

Finance
The Isberg Company just paid a dividend of $0.75 per share, and that dividend is expected to grow at a constant rate of 5.50% per year in the future. The company's beta is 1.25, the market risk premium is 5.00%, and the risk-free rate is 4.00%. What is the company's ...
Monday, April 2, 2012 at 3:13pm by Caitlin

finance
Given the following table: Type of Security Interest Rate 5-Year Treasury Note 5% 5-Year Corporate Bond (High quality) 6% 5-Year Corporate Bond (Low quality) 8% Calculate the default risk premium (DRP) on the Corporate bonds.
Saturday, January 30, 2010 at 2:45pm by Larry

Finance
For the first time in a very long time (perhaps ever!), the concept of financial risk and risk management has become a topic of concern at Presidential press conferences. Such concern has centered on esoteric financial products such as derivatives that are used to manage risk...
Monday, November 14, 2011 at 1:24pm by ALLIE

Finance
A risk adverse investor would choose the economy in which stock-returns are independent because the risk can be diversified away in a large portfolio.
Monday, August 2, 2010 at 11:15pm by Niki

financial management
A treasury bond that matures in 10 years has a yield of 6%. A 10 year corporate bond has a yield of 9%. assume that the liquidity premium on the corporate bond is 0.5%. What is the default risk premium on the corporate bond?
Tuesday, October 16, 2007 at 9:50pm by julie

Finance
Teddy Company paid a $3.50 dividend this year (D0 = $3.50). Next year the company expects to pay a $4.00 dividend (D1 = $4.00). The stock's dividend is expected to grow at a rate of 15 percent a year until three years from now (t = 3). After this time, the stock's ...
Sunday, November 18, 2012 at 8:54pm by Pam

College Finance
1.A recent edition of The Wall Street Journal reported interest rates of 10.75 percent, 11.10 percent, 11.48 percent, and 11.75 percent for 3-, 4-, 5-, and 6-year Treasury security yields, respectively. According to the unbiased expectation theory of the term structure of ...
Tuesday, February 19, 2013 at 11:51pm by Jona

finance (higher interest rate)
A higher interest rate (discount rate) would? A. reduce the price of corporate bonds B. reduce the price of preferred stock C. reduce the price of common stock D. all of the above I remember reading about the relationship between interest and bonds/stocks. When the FR raises ...
Friday, July 25, 2008 at 1:40pm by Jason

Finance
a. Assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par. The premium bond must have a lower current yeild and a higher capital gains yield than the par bond. b. A bond's current yield must...
Thursday, October 20, 2011 at 9:18pm by Anonymous

Finance
Which of the following statments is CORRECT? a. Assume that two bonds have equal maturities and are of equal risk, but one bond sells at par while the other sells at a premium above par. The premium bond must have a lower current yeild and a higher capital gains yield than the...
Thursday, October 20, 2011 at 9:18pm by Alice

Corporate Finance
The answer is all about the risk, not the percentages. In other words, there are only three projects that exceed the minimum WACC required based on the risk criteria: 15% because it exceeds the high risk WACC of 12% 12% because it meets and exceeds the average WACC of 10% and ...
Monday, March 1, 2010 at 1:21pm by Chimaren

Financial Management
Reading Foods is interested in calculating its weighted average cost of capital (WACC). The company’s CFO has collected the following information: • The target capital structure consists of 40 percent debt and 60 percent common stock. • The company has 20-year ...
Sunday, March 28, 2010 at 8:04pm by Michael

finance
You are considering an investment in a one year government debt security with a yeild od 5% or a highly liquid corporate debt security with a yeild of 6.5%. The expected inflation rate for the next year is expected to be 2.5%. A. what would be your real rate earned on either ...
Friday, January 27, 2012 at 7:29pm by Damon

Finance
Jim Bob is a stock picking genius. Every year, based on his system, he has the ability to invest $100 (only) in a security that is expected to earn a 20% return over the next year. That security always has a beta of one. Assume that the risk free rate is 4%, and the market ...
Wednesday, March 7, 2007 at 8:47pm by Brandon

Business
Based on this financial info where a company's Beta Year = 2008, the Company's commons stock = 0.85, the Risk-Free Rate of Return = 5%, and the Market Risk Premium = 6%. Use the dividend growth model to calculate the Company's Common Stock in 2008. Stock 1 = 1.5, ...
Thursday, December 9, 2010 at 2:40pm by Ann

Math
Stock Market History a. What was the average rate of return on large U.S. common stocks from 1900 to 2001? b. What was the average risk premium on large stocks? C. What was the standard deviation of returns on the market portfolio? a. Which index? Inflation adjusted or not? b...
Wednesday, March 21, 2007 at 11:57pm by Antoinette

Accounting PLEASE HELP!!!!!!!!!
Reading Foods is interested in calculating its weighted average cost of capital (WACC). The company’s CFO has collected the following information: • The target capital structure consists of 40 percent debt and 60 percent common stock. • The company has 20-year ...
Sunday, March 28, 2010 at 8:52pm by Michael

Math (Accounting)
Reading Foods is interested in calculating its weighted average cost of capital (WACC). The company’s CFO has collected the following information: • The target capital structure consists of 40 percent debt and 60 percent common stock. • The company has 20-year ...
Sunday, March 28, 2010 at 8:22pm by Michael

finance
Define the following terms and identify their role in finance: 1. Finance 2. Efficient Market 3. Primary Market 4. Secondary Market 5. Risk 6. Security 7. Stock 8. Bond 9. Capital 10. Debt 11. Yield 12. Rate of Return 13. Return on Investment 14. Cash Flow
Sunday, October 9, 2011 at 6:45pm by Anonymous

Finance
9. The variable (A) in the utility formula represents the: a. investor’s return requirement. b. investor’s aversion to risk. c. certainty equivalent rate of the portfolio. d. preference for one unit of return per four units of risk.
Monday, September 6, 2010 at 10:20am by Anonymous

Finance
You are considering an investment in a one-year government debt security with a yield of 5 percent or a highly liquid corporate debt security with a yield of 6.5 percent. The expected inflation rate for the next year is expected to be 2.5 percent. A. What would be your real ...
Wednesday, January 30, 2013 at 5:34pm by Anonymous

finance
6. You are considering an investment in a one-year government debt security with a yield of 5 percent or a highly liquid corporate debt security with a yield of 6.5 percent. The expected inflation rate for the next year is expected to be 2.5 percent. a. What would be your real...
Saturday, January 28, 2012 at 7:59pm by fran123

Corporate Finance
1. Langston Labs has an overall (composite) WACC of 10%, which reflects the cost of capital for its average asset. Its assets vary widely in risk, and Langston evaluates low-risk projects with a WACC of 8%, average projects at 10%, and high-risk projects at 12%. The company is...
Monday, March 1, 2010 at 1:21pm by Andy

Interest Rate
Is there an easier way to comprend how inflation, expectations, and risk combine to determine interest rates? I understand how risk plays a factor but I am unclear on expectations plays a role.
Monday, October 17, 2011 at 11:17am by Finance

finance
AAA has only stock and bonds in its capital structure. Balance sheet information: Long term debt (par value--NOT number of bonds) = $20,000,000, Common equity and retained earings = $17,000,000, and Shares of stock outstanding = 1,000,000. Bond information: Bond price ($1,000 ...
Friday, June 1, 2012 at 5:44pm by tina

economics
(Insurance) Let X = R+. Consider a house owner whose house has a risk of burning down with probability 0.001. If the house burns down it is worth $0 otherwise it is worth $1 million. The owner of the house is an expected utility maximizer with a vNM utility function u(x) = x^(...
Thursday, February 15, 2007 at 7:39pm by Kevin

Finance
You would like to create a portfolio that is equally invested in a risk-free asset and two stocks. The one stock has a beta of .80. What does the beta of the second stock have to be if you want the portfolio risk to equal that of the overall market?
Monday, October 26, 2009 at 10:26pm by brandon

finance
A thirty year US Treasury bond has a 4.0% interest rate.In contrast a ten year treasury bond has an interest rate of 3.7%. If inflation is expected to average 1.5% points over both the next ten years and thirty years, determine the maturity risk premium for the thirty year ...
Friday, January 27, 2012 at 7:24pm by fran taylor

Finance
Risk
Monday, December 11, 2006 at 1:46pm by Anonymous

Finance
6. You are considering an investment in a one-year government debt security with a yield of 5 percent or a highly liquid corporate debt security with a yield of 6.5 percent. The expected inflation rate for the next year is expected to be 2.5 percent. a. What would be your real...
Friday, November 2, 2012 at 1:11pm by Heather

Finance
Zabberer Corporation bonds pay a coupon rate of interest of 12 percent annually and have a maturity value of $1000. The bonds are scheduled to mature at the end of 14 years. The company has the option to call the bonds in 8 years at the premium of 12 percent above the maturity...
Saturday, September 10, 2011 at 9:22pm by Dora

allied health part 2-21
which of the following statements about risk management is true? a. risk management is unique to the health care industry b. risk management is controlled and managed by hipaa regulations. c. risk management is concerned with reducing exposure to legal liability d. risk ...
Wednesday, April 13, 2011 at 9:24pm by sarah

Finance
A thirty-year U.S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten-year Treasury bond has an interest rate of 3.7 percent. If inflation is expected to average 1.5 percentage points over both the next ten years and thirty years, determine the maturity risk ...
Wednesday, January 30, 2013 at 5:32pm by Anonymous

consumer math
amy miller's insurance policy has a $218.00 premium for 25/100 bodily injury limits and $25,000.00 property damage limits. the collision premium is $74.00. amy's driving-rating factor is 2.4. what is her annual premium?
Monday, February 25, 2013 at 6:00pm by dylan

Finance
Describe the relationship between the coupon rate and the required rate that will result in a bond selling at a premium?
Monday, October 27, 2008 at 7:10pm by Angel

Math-Statistics
An advisor offers 8 mutual funds in the high risk category, 7 moderate, 10 in low risk. The investor decides to invest in 3 high risk, 4 moderate risk, and 10 low risk. How many ways can he do this?
Sunday, February 10, 2013 at 9:36am by Betty

Statistics
An advisor offers 8 mutual funds in the high risk category, 7 moderate, 10 in low risk. The investor decides to invest in 3 high risk, 4 moderate risk, and 10 low risk. How many ways can he do this?
Saturday, February 9, 2013 at 5:04pm by Betty

Probability
An advisor offers 8 mutual funds in the high risk category, 7 moderate, 10 in low risk. The investor decides to invest in 3 high risk, 4 moderate risk, and 10 low risk. How many ways can he do this?
Saturday, February 9, 2013 at 3:07pm by Betty

Math
An advisor offers 8 mutual funds in the high risk category, 7 moderate, 10 in low risk. The investor decides to invest in 3 high risk, 4 moderate risk, and 10 low risk. How many ways can he do this?
Friday, February 8, 2013 at 11:22am by Betty

accounting
A company has an insurance policy for fifty thousand dollars that is due. How is this set up when the company does not pay it in full. It is paid monthly to an insurance premium company within one year. How do we set it up on the company books? There is a note to Premium ...
Sunday, July 22, 2012 at 8:18am by Beverly

finance
alpha of stock zero return on market 16% risk free rate 5% stock earns a return that exceeds risk free rate by 11% What is the Beta of the stock?
Saturday, May 31, 2008 at 3:26pm by Tiffany

English
Please read for any errors. And correct them. The premium on your disability insurance policy is overdue. Don’t let his valuable policy lapse. If you become disabled you will receive a monthly income from this policy. This disability policy provides importance security ...
Wednesday, February 16, 2011 at 5:24pm by Renell

Finance
United Technology Corporation (UTC) has $40 million of convertible bonds outstanding (40,000 bonds at $1,000 par value) with a coupon rate of 11 percent. Interest rates are currently 8 percent for bond of equal risk. The bonds have 15 years left to maturity. The bonds may be ...
Tuesday, November 13, 2012 at 7:03pm by John

investment
publicly-owned stock that is not listed on an exchange is traded in the over-the counter markets such as that Nasdap stock market, true or false. systematic risk is reduce through diversification is true or false unsystematic risk considerrs how firms finance their assets and ...
Friday, September 30, 2011 at 2:57am by Rick

Finance
describe the relationship between the coupon rate and the required rate of return that will result in a bond selling at: a - a discount b - face value c - a premium
Tuesday, October 7, 2008 at 4:23pm by Greatdanelola

ECON! Please help!
Joe: y= 100 (High) prob = 2/5 =25 (medium) prob= 2/5 =0 (low) prob = 1/5 Calculate: 1. José’s risk premium, p, associated with farming and 2. José’s certainty equivalent associated with farming. The village decides to implement an informal insurance (...
Tuesday, June 1, 2010 at 4:39am by anonymous

PERSONAL FINANCE
IF YOU WANT A RISK PROOF REAL ESTATE INVESTMENT, INVEST IN:
Tuesday, October 30, 2012 at 10:25am by RACHEL

Personal Finance
What is the risk and return on stocks, bonds, and mutual funds? Thanks
Monday, December 20, 2010 at 5:25pm by Sarah

personal finance
None of the above. There is no risk-proof real estate investment.
Monday, June 11, 2012 at 2:08am by Ms. Sue

sci 275
create a outline of the risk of using malathion according to the four steps of risk assessment presented. . Hazard identification . Dose- response . Exposure . Risk characterization
Friday, December 7, 2007 at 3:43pm by kelly

Finance
You are currently only invested in the Natasha Fund (aside from risk-free securities). It has an expected return of 14% with a volatility of 20%. Currently, the risk-free rate of interest of 3.8%. Your broker suggests that you add Hannah Corporation to your portfolio. Hannah ...
Monday, August 2, 2010 at 11:24pm by Anonymous

finance
How does an investor earn more than the return generated by the tangency portfolio and still stay on the security market line? a. Borrow at the risk free rate and invest in the tangency portfolio. b. Add high risk/return assets to the portfolio. c. Adjust the weight of stock ...
Monday, November 12, 2012 at 8:19pm by anonymous

Finance
Business risk refers to the relative dispersion of the firm’s earnings available to common stockholders.
Monday, November 2, 2009 at 11:35pm by Hannah

Finance
Given that the preferred shares on the balance sheet is $2100,000 , have a stated value of $21, callable at $22.50, and pay annual dividend of $2 , and are non-voting. What is the value of redemption premium?
Friday, October 22, 2010 at 10:20am by Aq

human risk assessment
(b) At a higher risk/dose slope factor, a smaller dose is needed to increase the risk by a given amount.
Saturday, November 3, 2007 at 7:35am by drwls

finance
the financial risk of the firm may increase and thus drive up the cost of all sources of financing
Thursday, July 24, 2008 at 7:54pm by stuckinmath

management of Institutional Risk
Describe the three types of organizational risk. Provide examples of each from your own organization. Which risk poses the greatest threat to your organization?
Wednesday, July 6, 2011 at 7:01pm by Booboo

SCI 275
"· Create an outline of the risk of using Malathion according to the four steps of risk assessment presented in Ch. 4 Figure 4.1: o Hazard identification o Dose-response o Exposure o Risk characterization "
Sunday, December 19, 2010 at 8:15pm by Ms. Sue

sci 275
Create an outline of the risk of using Malathion according to the four steps of risk assessment presented in Ch. 4, p. 73, Figure 4.1: o Hazard identification o Dose-response o Exposure o Risk characterization
Friday, December 7, 2007 at 3:43pm by Danny

finance
A treasury note with a maturity of four years carries a nominal rate of interest of 10%. In contrast, an eight year treasury bond has a yeild of 8%. A. If inflation is expected to average 7% over the first four years,what is the expected real rate of interest. B. If inflation ...
Friday, January 27, 2012 at 7:36pm by fran taylor

Linear Programming Investment Strategy
How can I set this question up? Client has 800,000 that must be invested in 3 funds. 20 to 40% invested in growth fund, 20 to 50% in income fund and at least 30% in money market fund. Client has a max risk index of 0.05. Risk indicators - growth fund is 0.10, income fund is 0....
Saturday, November 11, 2006 at 5:09pm by Bryan

risk management
Why is risk management important in organizations? What benefits are gained by implementing a risk-management program? Describe challenges you see in obtaining buy-in and support from staff. What are the barriers to implementing a risk-management program? What would you ...
Sunday, July 15, 2012 at 2:42pm by Anonymous

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