You’ve observed the following returns on Hacker Corporation’s stock over the past five years: -25%, 36%, 9%, 11%, and 17%. Answer the following questions.
Suppose the current T-bill rate is 0.15%. What is the risk premium of owing Hacker Corporation s stock?
a. 11.10%
b. 9.75%
c. 8.10%
d. 9.45%
What range of returns would you expect to see 95% of the time?
a. -34.57% to 53.77%
b. -56.66% to 75.86%
c. -12.49% to 31.69%
d. 9.6% to 22.09%
According to the Blume's formula, what is the 2-year average return forecast?
a. 8.57%
b. 7.62%
c. 9.11%
d. 9.60%