Explain an investments risk premium. Is there some set number to use in stock analysis? Explain.

Question:

Explain an investment’s risk premium. Is there some “set” number to use in stock analysis? Explain.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Personal Finance An Integrated Planning Approach

ISBN: 978-0136063032

8th edition

Authors: Ralph R Frasca

See More Books

Question Posted: Mar 19, 2015 10:41 AM

See More Questions

Explain what is meant by a financing risk premium in the equity cost of capital. When will a financing risk premium be negative?
Explain what the term premium and risk premium are and why they cause the interest rates that affect the cost of borrowing by households and businesses to differ from the federal funds rate.
Premium for Financial Risk Ethier Enterprise has an unlevered beta of 1.0. Ethier is financed with 50% debt and has a levered beta of 1.6. If the risk-free rate is 5.5% and the marker risk premium is...
What is a derivative contract? Give an example. How are derivatives related to risk management?
A student interested in improving her dart-throwing technique designs an experiment to test 4 different stances to see whether they affect her accuracy. After warming up for several minutes, she...
Insert the missing words: Testing provides direct material that can underwrite the audit report and conclusions that are contained therein. This is the proper relationship where . . . . . . . . . . ....
Visit the website for Rent the Runway, renttherunway.com. Navigate to dresses and sort the listings by highest to lowest price and lowest to highest price. What is the difference between how much you...
Technology of the Past (TOP) produces old-fashioned simple corkscrews. Last year was not a good year for sales but TOP expects the market to pick up this year. Last year's income statement showed...
Exercise 15-2 Finance lease; calculate lease payments [LO15-2] American Food Services, Inc., leased a packaging machine from Barton and Barton Co construction of the machine on January 1. 2018. The...
How can a nurse aide identify Mr. James’s medical problems, his emotional and physical needs, and deal with these problems? Pay close attention to safety issues specific for an individual who...
What investment implications can you derive from the information in Table? Express your answer from the perspectives of a young investor (mid-20s) and an older investor (mid-50s) nearing retirement.
People often understand through common sense that diversification reduces risk. But explain why diversification works and when it works most effectively. Also indicate when it may not be effective.
Four companies have responded to your RFP. Each proposal has a different technical solution to your problem and each proposal states that the information in the proposal is company-proprietary...
Two roommates (Jen and Kate) can choose whether to clean their apartment (C) or leave it dirty (D). Jen's cost of cleaning is c, but Kate doesn't mind cleaning and has no cost. [Recall that their...
Designation Mass per Depth Width Thickness metre of of section section of of web flange Root Depth radius between Ratios for local buckling Second moment of area Radius of gyration fillets | i Flange...
Discuss the attributes that make an effective leader. What tenets should a leader practice? How does leadership directly impact effective public management? In your own experience, what has led you...
Given the following examples identify whether it describes a positive externality, negative externality, or neither. Example 1: Johanna is graduating from college this weekend. Like her, individuals...
32) Suppose Joaquin grows at an average rate of 0.5in/year for 3 years, then 1.25 inches/year for 4 years, then 0.75 inches/year for 4 years, then 0.4in/year for 5 years. In that time span, how much...
A company uses machine hours to apply both variable and fixed overhead. Budgeted variable overhead is $$100,000.$ Budgeted fixed overhead is $$200,000.$ The budgeted machine hours are 1,000....
Accounting policies and practices that are most important to the portrayal of the companys financial condition and results, and require managements most difficult, subjective, or complex judgments...
Do stock splits provide a direct benefit to stockholders?
Slattery Industries reported the following financial information for 20X2: Revenues ....................$10.0 million Costs & expenses (excluding depreciation) ...........8.0 Depreciation...
Linden Corp. has a 10% market share in its industry. Below are income statements ($millions) for Linden and for the industry. a. Develop common sized income statements for Linden and the industry as...
Norton Industries recorded total cost of goods sold for 20X2 of $6.5 million. Norton had the following inventory balances for the months indicated (end of period balances): a. Compute inventory...
A stock is expected to pay a dividend of $1.50 at the end of the year (i.e., D 1 = $1.50), and it should continue to grow at a constant rate of 10% a year. If its required return is 14%, what is the...
The Hobby Shop has a checking account with a ledger balance of $1,700. The firm has $2,400 in uncollected deposits and $4,200 in outstanding checks. What is the amount of the disbursement float on...
An investment will pay you $34,000 in 11 years. If the appropriate discount rate is 6.1 percent compounded daily, what is the present value? (Use 365 days a year. Do not round intermediate...

Explain an investments risk premium. Is there some set number to use in stock analysis? Explain.

Question:

Step by Step Answer:

An investments risk premium is the difference between an investments return an...View the full answer

Personal Finance An Integrated Planning Approach

Students also viewed these Accounting questions