The average rate of return on investments in large stocks has outpaced that on investments in Treasury bills by about 8% since 1926. Why, then, does anyone invest in Treasury bills?

Which of the following is not considered part of M2? a. money market mutual fund shares b. large time deposits of more than $100,000 c. small time deposits of less than $100,000 d. savings deposits

Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 500 will sell at year-end at a price of $48. The stock will pay a dividend at year-end of $4.00. Assume that risk-free Treasury securities currently offer an interest rate of 2.2%. Average rates of return on Treasury bills, government bonds, and common stocks, 1900-2017 (figures in percent per year) are as follows. Portfolio Treasury bills Treasury bonds. Common stocks Discount rate Average Annual Rate of Return (8) 3.8 5.3 11.5 Stock price a. What is the discount rate on the stock? (Enter your answer as a percent rounded to 2 decimal places.) Average Premium (Extra return versus Treasury bills) (8) % 1.5 7.7 b. What price should she be willing to pay for the stock today? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

You are the CFO of a company and the CEO wants you to tell him which evolution we will see in interest rates in the near future (say this year and next year). What do you tell him and why? Should your company issue bonds now?

Use the data in the tables below to answer the following questions: Average rates of return on Treasury bills, government bonds, and common stocks, 1900-2017. Average Premium Portfolio Treasury bills Treasury bonds Common stocks Average Annual Rate of Return (%) (Extra return versus Treasury bills) (%) 3.8 5.3 11.5 1.5 7.7 Standard deviation of returns, 1900-2017. Standard Portfolio Deviation (%) Treasury bills 2.9 Long-term government bonds 9.0 Common stocks 19.7 a. What was the average rate of return on large U.S. common stocks from 1900 to 2017? b. What was the average risk premium on large stocks? c. What was the standard deviation of returns on common stocks? (Enter your answer as a percent rounded to 1 decimal place.) a. Average rate of return 11.5 % b. Average risk premium 7.7 % C. Standard deviation of returns 19.7 %

Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 500 will sell at year-end at a price of $47. The stock will pay a dividend at year-end of $2.00. Assume that risk-free Treasury securities currently offer an interest rate of 2.3%. Average rates of return on Treasury bills, government bonds, and common stocks, 1900–2017 (figures in percent per year) are as Follows. Average Premium (Extra return versus Treasury bills) (%) Average Annual Rate of Return (%) Portfolio Treasury bills Treasury bonds 3.8 5.3 1.5 Common stocks 11.5 7.7 a. What is the discount rate on the stock? (Enter your answer as a percent rounded to 2 decimal places.) Discount rate % 6. What price should she be willing to pay for the stock today? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price

Top hedge fund manager Sally Buffit believes that a stock with the same market risk as the S&P 500 will sell at year-end at a price of $50. The stock will pay a dividend at year-end of $2. Assume that risk-free Treasury securities currently offer an interest rate of 2%. Average rates of return on Treasury bills, government bonds, and common stocks, 1900-2017 (figures in percent per year) are as follows. Average Premium (Extra return versus Treasury bills) ($) Average Annual Rate of Return ipped Portfolio ($) 3.8 Treasury bills Treasury bonds 5.3 1.5 Common stocks 11.5 7.7 Book Ask a. What is the discount rate on the stock? (Enter your answer as a percent rounded to 2 decimal places.) Print eferences Discount rate 9.70 % b. What price should she be willing to pay for the stock today? (Do not round intermediate calculations. Round your answer decimal places.) Stock price

Suppose interest rates on Treasury bonds rose from 5% to 9% as a result of higher interest rates in Europe. What effect would this have on the price of an average company's common stock? (Hint: in your explanation consider alternative investment to common stocks; a relatively riskless investment)

Which one of the following categories has the widest frequency distribution of returns for the period 1926-2014?   Multiple Choice   Small-company stocks   U.S. Treasury bills   Long-term government bonds   Inflation   Large-company stock

Suppose a man invested $300 at the end of 1900 in each of three unds that tracked the averages of stocks, bonds, and cash, espectively. Assuming that his investments grew at the rates iven in the table to the right, approximately how much would each vestment have been worth at the end of 2007? Category Stocks Bonds Cash is investment in the fund tracking stocks would be worth approximately $ Do not round until the final answer. Then round to two decimal places as needed.) Average Annual Returni 6.2% 2.1% 0.8%