Homework Answers
The rate of return of the following security is normally used as the risk-free rate of return:-
b) treasury bills
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The rate of return on which type of security is normally used as the risk-free rate of return? Multiple Choice Long-ter...
In the real world, the type of security that is used to approximate the risk-free rate...
In the real world, the type of security that is used to approximate the risk-free rate of return is a United States Treasury Bill. T/F
Government of Canada Treasury Bills are considered risk free because: Multiple Choice the bills a...
Government of Canada Treasury Bills are considered risk free because: Multiple Choice the bills are locked in the vaults at the Bank of Canada treasury bills can be traded in the market. the returns are relatively certain and there is no variability. corporations are interested in these treasury bills.
Government of Canada Treasury Bills are considered risk free because: Multiple Choice the bills are locked in the vaults at the Bank of Canada treasury bills can be traded in the...
Which is a commonly used proxy for the "risk-free rate"? A The average historical interest rate...
Which is a commonly used proxy for the "risk-free rate"? A The average historical interest rate on long-term government bonds B The current market rate interest rate on a government-insured savings account C The current yield to maturity on a long-term government bond D The rate of return on a low volatility stock
e. The risk-free rate on long-term Treasury bonds is 6.04%. Assume that the market risk premium...
e. The risk-free rate on long-term Treasury bonds is 6.04%. Assume that the market risk premium is 5%. What is the expected return on the market? Now use the SML equation to calculate the two companies' required returns. Market risk premium (RPM) = 5.000% Risk-free rate = 6.040% Expected return on market = Risk-free rate + Market risk premium = 6.040% + 5.000% = 11.040% Required return = Risk-free rate + Market Risk Premium x Beta Goodman: Required return =...
The risk-free rate is the interest rate: Multiple Choice 0 at which one would lend if...
The risk-free rate is the interest rate: Multiple Choice 0 at which one would lend if there were no risk of default. 0 savers get on their deposits. 0 borrowers get when the loan is extremely short term. 0 the government charges for the loans it gives out.
Over the past 88 years, we have observed that investments with the highest average annual returns...
Over the past 88 years, we have observed that investments with the highest average annual returns also tend to have the highest standard deviations of annual returns. This observation supports the notion that there is a positive correlation between risk and return. Which of the following answers correctly ranks investments from highest to lowest risk (and return), where the security with the highest risk is shown first, the one with the lowest risk last? Small-company stocks, long-term corporate bonds, large-company...
Which one of the following is a correct ranking of securities based on the volatility of...
Which one of the following is a correct ranking of securities based on the volatility of their annual returns over the period of 1926-2013? Rank from highest to lowest. Multiple Choice Large-company stocks, U.S. Treasury bills, long-term government bonds o C) Small-company stocks, long-term corporate bonds, large-company stocks o Long-term government bonds, long-term corporate bonds, Intermediate-term government bonds o o Intermediate-term government bonds, long-term corporate bonds, U.S. Treasury bills o O Large-company stocks, small company stocks, long-term government bonds
Over the past 89 years, we have observed that investments with the highest average annual returns...
Over the past 89 years, we have observed that investments with the highest average annual returns also tend to have the highest standard deviations of annual returns. This observation supports the notion that there is a positive correlation between risk and return. Which of the following answers correctly ranks investments from highest to lowest risk (and return), where the security with the highest risk is shown first, the one with the lowest risk last? a. Large-company stocks, small-company stocks, long-term...
The higher the risk of a security, the higher its expected return will be. A bond's...
The higher the risk of a security, the higher its expected return will be. A bond's risk level is reflected in its yield, but understanding the different risks involved when investing in bonds is important. The following graph shows the relationship between interest rates and maturity for three security classes: US Treasury securities (USTS), AA-rated corporate bonds, and BBB-rated corporate bonds. Use the dropdown menus to label each security's profile correctly: YIELD /%) 5 10 15 20 25 30 YEARS...
1.Which one of the following categories of securities had the most volatile annual returns over the...
1.Which one of the following categories of securities had the most volatile annual returns over the period 1926–2016? a ,Long-term corporate bonds b,Large-company stock c,Intermediate-term government bonds d,U.S. Treasury bills e,Small-company stocks 2. Which one of the following statements is correct based on the historical record for the period 1926–2016? a,The standard deviation of returns for small-company stocks was double that of large-company stocks. b,U.S. Treasury bills had a zero standard deviation of returns because they are considered to be...
Government of Canada Treasury Bills are considered risk free because: Multiple Choice the bills are locked in the vaults at the Bank of Canada treasury bills can be traded in the market. the returns are relatively certain and there is no variability. corporations are interested in these treasury bills.
Government of Canada Treasury Bills are considered risk free because: Multiple Choice the bills are locked in the vaults at the Bank of Canada treasury bills can be traded in the...
The risk-free rate is the interest rate: Multiple Choice 0 at which one would lend if there were no risk of default. 0 savers get on their deposits. 0 borrowers get when the loan is extremely short term. 0 the government charges for the loans it gives out.
Which one of the following is a correct ranking of securities based on the volatility of their annual returns over the period of 1926-2013? Rank from highest to lowest. Multiple Choice Large-company stocks, U.S. Treasury bills, long-term government bonds o C) Small-company stocks, long-term corporate bonds, large-company stocks o Long-term government bonds, long-term corporate bonds, Intermediate-term government bonds o o Intermediate-term government bonds, long-term corporate bonds, U.S. Treasury bills o O Large-company stocks, small company stocks, long-term government bonds
The higher the risk of a security, the higher its expected return will be. A bond's risk level is reflected in its yield, but understanding the different risks involved when investing in bonds is important. The following graph shows the relationship between interest rates and maturity for three security classes: US Treasury securities (USTS), AA-rated corporate bonds, and BBB-rated corporate bonds. Use the dropdown menus to label each security's profile correctly: YIELD /%) 5 10 15 20 25 30 YEARS...
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