FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You require a risk premium of 3.5 percent on an investment in a company. The pure rate of interest in the market is 3.0 percent

You require a risk premium of 3.5 percent on an investment in a company. The pure rate of interest in the market is 3.0 percent and the inflation premium is 3 percent.US Treasury bills are risk free. What should be the yield of the US Treasury bills? Use multiplicative form.

Should be somewhere between 5-7 %!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Personal Finance

Authors: Jack R. Kapoor, Les R. Dlabay, Robert J. Hughes, Melissa Hart

12th edition

1259720683, 978-1259720680

More Books

Students also viewed these Finance questions

Question

★★★★★
The financial statements of Compton and Company follow. Required Prepare a statement of cash flows for 2013 using the indirect method of presenting cash flows from operatingactivities. Compton and...

Answered: 1 week ago

Question

★★★★★
Water pollution testing. The EPA wants to test a randomly selected sample of n water specimens and estimate m, the mean daily rate of pollution produced by a mining operation. If the EPA wants a 95%...

Answered: 1 week ago

Question

★★★★★
What is the measure of reliability of a confidence interval?

Answered: 1 week ago

Question

★★★★★
What are some pros and cons of holding high levels of current assets in relation to sales? Use the DuPont equation to help explain your answer.

Answered: 1 week ago

Question

★★★★★
An " A " rated corporate bond from Textron has 8 years until maturity, a coupon rate (paid semiannually) of 4.2%, and par value of $1000, Similar corporate bonds have yields-to-maturity of 2.9%. At...

Answered: 1 week ago

Question

★★★★★
Note: Please include the formula first before doing the computation. Also, use a good format. You may use tables. Thank you.For 6 to 7. Raphael Marco Corp., a company with outstanding common shares...

Answered: 1 week ago

Question

★★★★★
Use Excel to answer the questions below. Formulate the null and alternative hypothesis. Present the answer in tabulated form and indicate the decision in the table. Follow the example of tabulated...

Answered: 1 week ago

Question

★★★★★
Marcia, a project manager, was in charge of assigning tasks for the school's barbecue fundraiser. One of the team members, Larry, hated to cook but was an excellent bartender. Marcia should develop a...

Answered: 1 week ago

Question

★★★★★
A Production Facility has produced 615,000 products and would like to allocate these products to their customers. Given the following requested customer demand, calculate how much of the EXCESS...

Answered: 1 week ago

Question

★★★★★
The December cash records of Devin Insurance follow: (Click the icon to view the checkbook.) Devin's Cash account shows a balance of $16,320 at December 31. On December 31, Devin Insurance received...

Answered: 1 week ago

Question

★★★★★
SoGood Candy Company is evaluating its quarterly working capital needs. Using the information below, calcuate the working capital, permanent working capital, and temporary working capital needs for...

Answered: 1 week ago

Question

★★★★★
Required: 4.1 Calculate the following: 4.1.1 Investment income. 4.1.2 Cash and cash equivalents at the end of the year. 4.1.3 Carrying / Book value of the equipment sold. 4.2 Analyse the following by...

Answered: 1 week ago

Question

★★★★★
Where would equity theory be relevant in Alibabas history?

Answered: 1 week ago

Question

★★★★★
Can Jack Mas statement suggesting he was happier earning $12 a month as a school teacher be justified? Explain your answer using the motivational theories.

Answered: 1 week ago

Question

★★★★★
What is your opinion on DTO? What motivation theory do you think it has been inspired by? Explain whether or not you would adopt it in your organization.

Answered: 1 week ago

Previous Question Next Question