Historical return on stock market and risk-free rate
The market risk premium is difference among the historical return upon the stock market and the risk-free rate, for yearly. Why is this negative for some years?
Expert
The market risk premium (needed return) is not the difference among the historical return of the stock market and that of fixed-income. For illustration, the historical return of stock market over fixed-income in the United States fluctuates among 3 and 15 percent according to the time period referenced. The needed equity premium is the additional return an investor needs of the shares above the risk-free fixed-income. This does not have similar value for each investor and this is not observable. Thus, we cannot say this is a characteristic parameter of international or national economy.
Straddle & Strangle: In the case of shorting butterfly spread, it can be seen that the gains are limited. However, there exists another strategy known as straddle which produces unlimited gains. This strategy benefits when the trader expects that
Nominal gross domestic product: If GDP of a particular year is estimated on the base of price of similar year, it is termed as nominal GDP.
Suppose that the two securities APPL and MSFT account for the entire large cap technology component of the S&P 500 (hypothetically – of course – there are really plenty of others). Further, suppose that their weights in the S&P index were as follow
Is Capital Cash Flow identical with Free Cash Flow?
AB Corp. is in the business of making white-board markers. They are computing the potential of investing in some new equipment that will enhance their manufacturing process. The initial cost of the latest machinery is $470,000 plus a one-time installation cost o
Handy Inc has debt-to-assets ratio of 40%, tax rate of 35%, and total value of $100 million. W. C. Handy, the CFO, would like to increase the leverage ratio to 42%, and he believes that there will be no change in the bankruptcy cost of the company. How many dollars wo
Cost of capital aspect: Estimation of WCR is beneficial from the point of view of cost of capital too. A sound working capital position is beneficial from the point of view of both owners and lenders of the company. A sufficiently positive position me
State when market is expected to go up then what is the Strategy of Bull Spread?
Active vs. Passive fund managers: Passive fund managers adopt a long term buy and hold strategy. Usually, stocks are purchased so that the portfolio’s returns will track those of an
XY Company has made a portfolio of such three securities: The correlation coeffic
18,76,764
1938565 Asked
3,689
Active Tutors
1457531
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!