Question
To fund the massive stimulus package that combats COVID19, the government borrows money through ten-year government bonds that yield 3% per annum. This represents the
To fund the massive stimulus package that combats COVID19, the government borrows money through ten-year government bonds that yield 3% per annum. This represents the risk-free rate that sets the benchmark for long-term risky assets in the economy.
The government is also borrowing money in the short term with 1 year treasury notes that yield 1.5% per annum.
You are considering investing in risky shares both in the long term and short term. Given the information provided, for long term shares, an acceptable return would be (1) ___________ while for short term shares, an acceptable return would be (2) _______________.
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