Calculating the four-year yield assumes that the three-year yield is 6 % and the five-year yield is 4.5 %. Use the linear discount factors method and raw interpolation methodologies.
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- The variance ratio (VR) can be used to determine whether returns satisfy the efficient market hypothesis (EMH). Let n = 5 and r5,t be the five period log return at time t, where t = 1, 2,..., T. 1. Express (r5,t — Ã5) in terms of deviations of the relevant one period log returns from their respective means. Denote 75 to be the mean of the five period log return.You have data on the following assets: asset Expected return Standard DeviationA 15.0% 21.0%B 15.5% 20.2%C 18.0% 25.0% Calculate the coefficient of variation for each of the assets. Which one is the best investment option?Calculate the Payback period, Accounting Rate of Return and the Net Present Value (using a 17% discount factor) and a fair approximation range of the Internal Rate of Return for the data presented below
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