ge ann 1-month U.S. equity T-bills 3.30 0.93 3.59 6.98 1.66 Excess return 8.87 9.33 6.63 11.00 8.50 12.17 10.26 10.21 17.97 10.16 Market Standard deviation 20.25 26.57 20.32 14.40 18.85 Sharpe ratio 0.44 0.35 0.33 0.76 0.45 Period 1927 to 2021 1927 to 1950 1951 to 1974 1975 to 1998 1999 to 2021 From 19 27 to 2021, the passive risky portfolio offered an average risk premium of 8.87% with a standard deviation of 20.25 reward-to-volatility ratio of .44 esulting in a If 68% of net worth of a US investor is in risky assets, what is the average degree of risk aversion of an US Investor?

The following return series comes from Global Financial Data. US T-bills CPI Year Large Stocks LT Gov Bonds (Rf asset) (inflation) 2017 21.83% 6.24% 0.80% 2.07% 2018 -5.28% -1.25% 1.81% 2.10% 2019 25.45% 3.35% 2.15% 1.10% 2020 18.16% 10.25% 4.50% 1.88% 2021 28.70% -1.54% 0.40% 7.00% 2022 -19.78% -8.55% 2.20% 6.50% Calculate the average real risk premium earned on large-company stocks using the approximate Fisher equation. (Enter percentages as decimals and round to 4 decimals)

What is the return on the following investment? Original Cost or Selling Price of Distributions Percent Investment Invested $ Investment Received $ Return Stock $34.00 $26.00 $2.00 -16.11% -14.5% -17.65% -19.35% -21.23%

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Consider the following 3 assets portfolio: Asset US Equity Intl. Equity US Corporate Bonds Correlations US Equity Intl. Equity US Corporate Bonds 18% O 14.95% O 13.36% Weights O 1.79% 50% 30% 20% US Equity What is the portfolio's standard deviation? 1 0.8 0.1 St. Dev. 18% 16.50% 5% Intl. Equity 1 -0.1 US Corporate Bonds 0.1 -0.1 1

48 The Sunland Products Co. currently has debt with a market value of $300 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,434.63 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $10 per share. The preferred shares pay an annual dividend of $1.20. Sunland also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 5 percent per year forever. If Sunland is subject to a 40 percent marginal tax rate, then what is the firm's weighted average cost of capital? Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen…

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470 - 35 you have concluded that the following relationships are possible next year: economic status         probability      rate of return weak economy              .15                    -5% static economy              .6                         5% strong economy            .25                      15%   What is the standard deviation of the rate of return for the one year period? a. .65 % b. 1.45% c. 4% d. 6.25% e. 6.4%

4 - Based on economistsAc€?c forecasts and analysis, 1-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: R1 = .90% E(2r1) = 2.05% L2 = 0.09% E(3r1) = 2.15% L3 = 0.12% E(4r1) = 2.45% L4 = 0.14% Using the liquidity premium theory, plot the current yield curve. Make sure you label the axes on the graph and identify the four annual rates on the curve both on the axes and on the yield curve itself. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year Current (Long-term) Rates 1 %    2 %    3 %    4 %    6 - On March 11, 20XX, the existing or current (spot) 1-, 2-, 3-, and 4-year zero coupon Treasury security rates were as follows: 1R1 = 0.90%,    1R2 = 1.50%,      1R3 = 1.90%,     1R4 = 2.05% Using the unbiased…

TABLE 5.3 Risk and return of investments in major asset classes, 1927-2018 Average Risk premium Standard deviation max min T-bills 3.38 na 3.12 14.71 -0.02 T-bonds 5.83 2.45 11.59 41.68 -25.96 Stocks 11.72 8.34 20.05 57.35 -44.04