Question
You are following long-run annual rates of return for different investment instruments: U.S. Government T-bills 3.85% Large-cap common stock 11.80% Long-term corporate bonds 5.75% Long-term
You are following long-run annual rates of return for different investment instruments:
U.S. Government T-bills 3.85%
Large-cap common stock 11.80%
Long-term corporate bonds 5.75%
Long-term government bonds 4.50%
Small-capitalization common stock 12.80%
Based on the information above:
a)Estimate/compute the Common Stock Risk Premium, Small Firms Stock Risk Premium, Horizon (Maturity) Premium, and Default Premium.
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Valuation Measuring And Managing The Value Of Companies
Authors: McKinsey & Company Inc., Tom Copeland, Tim Koller, Jack Murrin
3rd Edition
0471361909, 978-0471361909
