Which one of the following is the most apt to have the largest risk premium in the future based on the historical record for 1926-2014? Multiple Choice U.S. Treasury bills Large-company stocks Long-term government debt Small-company stocks Long-term corporate debt
Q: The respective maturities of these newly issued debt instruments are approximately equivalent. Which…
A: zero coupon bond will be subject to greatest relative amount of price volatility if interest rates…
Q: Suppose the Federal Reserve instructs the Trading Desk to purchase $1 billion of securities. Show…
A: Balance sheet includes the assets, liabilities and stockholders' equity that show the financial…
Q: What is a maturity risk premium? Group of answer choices -A premium that reflects interest rate…
A: Maturity risk premium: It is the additional return on investment when buying any bond with longer…
Q: Which of the following provides the best estimate of the risk-free interest rate for the CAPM…
A: CAPM is a tool or model which is used to find the possible return form the stock by considering risk…
Q: Indicate whether the following instruments are examples of money market or capital…
A: The money market financial instruments are: U.S treasury bills and dealer commercial paper
Q: Would you recommend that financial institutions increase or decrease
A: It is favourable to increase their concentration on long term bonds before inflation declines…
Q: Explain the interest rate sensitivity of government debt as a function of: i) its maturity and ii)…
A: Financing price affectability may be a proportion of what quantity the value of a fixed-pay resource…
Q: Which of the following statements correctly describes the relationship between a long-term bond’s…
A: Coupon Rate: It is the rate of interest paid to the bondholder on the face value of the bond. It is…
Q: Which of the following portfolios have the least risk? why? A portfolio of long-term Government…
A: Treasury bills: Issued as a promissory note The main aim to issue treasury bill is to meet the…
Q: Given recent evidence concerning the CAPM, which of the following portfolios might be expected to…
A: An asset that plots above the SML is considered an undervalued asset as it provides a return larger…
Q: Which flow of funds indicator is considered bearish for equities? A. Higher than Average cash…
A: The flow of funds refers to the accounts of a corporation that are utilized by the corporations to…
Q: Which of the following facilitates trading of short term corporate bonds in an economy? Select one:…
A: Short term corporate bonds are issued by government and companies for short term financing…
Q: Which of the following types of investments would be most appropriate during periods of deflation?…
A: The deflationary phase of an economy will be reflective of contractionary phase of economy in which…
Q: How can studying the historical returns of stocks, bonds, and inflation increase your understanding…
A: The understanding of the financial market should be based on many procedures like the study of…
Q: Which of the following is generally considered the third riskiest? O Treasury bill O Long-term…
A: Risky Investment is attributed for investment options which carries some probability that returns or…
Q: Let's say that the data shows how the spread between the interest rates on corporate bonds and U.S.…
A: The investment grade bond market, which normally functions well, did not function as well during the…
Q: The 2008 Financial crises systemic risk or not? If yes then why. If not then why?
A: The 2008 Financial crisis can be considered a systemic risk because it affected all the industries…
Q: Which of the following statements is CORRECT? Group of answer choices The…
A: here below statement is correct one. The relevant WACC can change depending on the amount of funds a…
Q: initial measurement of a bond on its issuance
A: First option is wrong because initial measurement of bonds can be done by market quotation to fix…
Q: Inflation-linked bonds, also known as treasury inflation-protected securities (TIPS), are used to…
A: Treasury inflation-protected securities (TIPS) are a form of US government-issued treasury…
Q: If the Federal Reserve Bank (FRB) announces a change by increasing the Federal Funds rate, this will…
A: Federal Interest rate and Bond price have an inverse relationship. Bond price and yield to maturity…
Q: xplain how individual securities affect investment portfolio risk. In your answer, when discussing…
A: Portfolio risk - Portfolio risk refers to the possibility that the assets or units in your…
Q: Quoted interest rates are rates stated in the tenor or contract of a particular security. All of the…
A: Solution Concept Quoted interest rate is the coupon rate It is mentioned in the bond indenture and…
Q: You manage a portfolio of U.S. and global stocks. You are considering replacing global stocks with…
A: US treasury securities are the ones which are issued by the finance department of the US. Global…
Q: From the perspective of the treasury professional, which of the following is a type of market risk…
A: Financial risk is the risk that that indicate the chances of loss that can be incurred to the…
Q: Treasury bills typically provide higher average returns, both in nominal terms and in real terms,…
A: Solution- Meaning of Treasury bill-They are short term borrowing instrument.Treasury bills are…
Q: (c) Studies show that the correlations between domestic stocks are greater than the correlations…
A: The connection between two data series, in this case monthly total returns, is measured by…
Q: Suppose the real risk-free rate and inflation rate are expected to remain at their current levels…
A: 1. Upward Sloping Yield Curve (Reason: A typical yield curve for Treasury securities might include…
Q: Based upon risk, which of the following financial assets is likely to have the highest required rate…
A: Option A: Corporate Bond: A corporate bond is less risky as return on investment is guaranteed.…
Q: Which of the following securities is least attractive for a pension fund? Corporate bonds…
A: Retirement is an important stage in your life. Everybody, whether self-employed or salaried, expects…
Q: These are corporate bonds that have a higher rate of return with a higher level of risk?
A: The rate of return is the expression in the percentage of the gain or loss on investment against the…
Q: Rank the following categories of securities in terms of their overall volatility, in order from…
A: The question is based on the concept Volatility, which is measured in terms of standard deviation or…
Q: Which one of the following categories has the widest frequency distribution of returns for the…
A: Statement of return and SD for the period 1926 to 2008: Particulars Return % SD % Small company…
Q: Does a large national debt impact the stock market?
A: The national debt of a country represents the amount of debt which is owed by the country to its…
Q: Critically discuss the significance of including the factor of inflation in corporate finance…
A: Inflation in general will impact the cash flows projected and used under capital budgeting analysis.…
Q: Classify each of the following in terms of their effect on interest rates (increase or decrease): I.…
A: Interest rates Interest rate is referred to as the amount a lender charges to a borrower and is a…
Q: Over the period of 1926-2014, which one of the following investment classes had the highest…
A: Volatility is also called risk. Higher the risk and higher the return. The stock which has lass…
Q: he rate of return on which one of the following has a risk premium of 0%? Multiple Choice…
A: Risk Premium is the return offered to the investors for inducing them to invest in securities having…
Q: 4 Risk free rate represents: Group of answer choices The rate provided by short term government…
A: Risk free rate of return means the investment which is having rate of return is at zero risk.
Q: Assume that inflation is expected to rise soon. How could this affect future bond prices? Would you…
A: Inflation affects bond’s interest rate and interest rate in turns affect the bond prices. There is…
Q: Define and briefly discuss the investment merits of each of the following. Blue chips Income stocks…
A: Investment is referred to as an asset that are acquired or invested for building the wealth and also…
Which one of the following is the most apt to have the largest risk premium in the future based on the historical record for 1926-2014?
-
U.S. Treasury bills
-
Large-company stocks
-
Long-term government debt
-
Small-company stocks
-
Long-term corporate debt
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Over the period of 1926-2014, which one of the following investment classes had the highest volatility of returns? Multiple Choice Large-company stocks U.S. Treasury bills Small-company stocks Long-term corporate bonds Long-term government bondsUse the data in the tables below to answer the following questions: Average rates of return on Treasury bills, government bonds, and common stocks, 1900–2020. Portfolio Average Annual Rate of Return (%) Average Premium (Extra return versus Treasury bills) (%) Treasury bills 3.7 Treasury bonds 5.4 1.7 Common stocks 11.5 7.8 Standard deviation of returns, 1900–2020. Portfolio Standard Deviation (%) Treasury bills 2.8 Long-term government bonds 8.9 Common stocks 19.5 What was the average rate of return on large U.S. common stocks from 1900 to 2020? What was the average risk premium on large stocks? What was the standard deviation of returns on common stocks? Note: Enter your answer as a percent rounded to 1 decimal place.Which asset class has the highest average historical returns and also the highest risk as measured by standard deviation? US treasury bills Large company stocks Small company stocks Long-term corporate bonds Long-term government bonds
- The distribution of returns for which one of the following for the period of 1926-2006 produces the widest bell curve (or distribution)? O inflation. O long-term government bonds O large-company stocks O U.S. Treasury bills. small-company stocksWhich 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 stockWhich of the following is generally considered the third riskiest? O Treasury bill Long-term corporate bond Small-company stock O large company stock Long-term government bonds
- Which asset below is generally the most suitable benchmark measure of the risk-free return? Treasury bills Small stocks Long-term government bonds Non-investment grade bonds Common stocksDuring the 1927-2018 period the Sharpe ratio was greatest for which of the following asset classes? Multiple Choice Long-term U.S. Treasury bonds Small/growth U.S. stocks Bond world portfolio return in U.S. dollars Big/value U.S. stocksWhich of the following portfolios have the least risk? why? A portfolio of long-term Government bonds Standard and Poor's composite index Portfolio of common stocks of small firms A portfolio of treasury bills
- The measure of risk is called: Group of answer choices The rate provided by short term government securities Beta The market rate of return The rate provided by long term government securitiesQUESTION 1 Which of the following data best represents a sample? The daily returns of SABIC'S stock for the year 2021. The daily S&P 500 returns for the year 2021 as a representative of U.S. stock returns. The daily returns of stocks trading above $100 for the year 2021. None of the above QUESTION 2 Which of the following is measured with a categorical nominal scale? Mutual funds' investment style. Mutual funds' asset allocation weights. Mutual funds' age class. None of the above. 0000Based upon risk, which of the following financial assets is likely to have the highest required rate of return? Select one: A. A corporate bond B. A U.S. Treasury bill C. A bank certificate of deposit D. A share of common stock