Problem 37 Intro Below are the expected returns for different asset classes for next year: Asset...
Problem 37
Intro
Below are the expected returns for different asset classes for next year:
| Asset class | Exp. return |
| T-bills | 2.2% |
| Corporate bonds | 6.6% |
| Small company stocks | 15.6% |
| Large company stocks | 9.5% |
Attempt 1/10 for 8 pts.
Part 1
What is the risk premium for corporate bonds?
Attempt 1/10 for 8 pts.
Part 2
What is the risk premium for small company stocks?
Attempt 1/10 for 8 pts.
Part 3
What is the risk premium for large company stocks?
Homework Answers
Corporate Bonds:
Risk Premium = Expected Return - Risk-free Rate
Risk Premium = 6.60% - 2.20%
Risk Premium = 4.40%
Small Company Stocks:
Risk Premium = Expected Return - Risk-free Rate
Risk Premium = 15.60% - 2.20%
Risk Premium = 13.40%
Large Company Stocks:
Risk Premium = Expected Return - Risk-free Rate
Risk Premium = 9.50% - 2.20%
Risk Premium = 7.30%
Add Answer to:
Problem 37
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