EBK FUNDAMENTALS OF CORPORATE FINANCE
EBK FUNDAMENTALS OF CORPORATE FINANCE
9th Edition
ISBN: 9781260049237
Author: BREALEY
Publisher: MCGRAW HILL BOOK COMPANY
Question
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Chapter 11, Problem 1QP

a)

Summary Introduction

To discuss: The average rate of return of country U large common stocks from 1900 to 2015.

a)

Expert Solution
Check Mark

Explanation of Solution

The average rate of return of country U large common stocks are 11.4% for the period of 1900 to 2015.

b)

Summary Introduction

To discuss: The average risk premium on big stocks.

b)

Expert Solution
Check Mark

Explanation of Solution

The average risk premium on big stock is 7.6% for the period of 1900 to 2015.

c)

Summary Introduction

To discuss: The market portfolio’s standard deviation of returns.

c)

Expert Solution
Check Mark

Explanation of Solution

The market portfolio’s standard deviation of returns is 19.9% for the period of 1900 to 2015.

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Using the data in the table:, a. What was the average annual return of Microsoft stock from 2005-2017? b. What was the annual volatility for Microsoft stock from 2005-2017? a. What was the average annual return of Microsoft stock from 2005-2017? The average annual return is %. (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Realized Return for the S&P 500, Microsoft, and Treasury Bills, 2005-2017 S&P 500 Realized Return Microsoft Realized Return Dividends Paid* Year End 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 S&P 500 Index 1211.92 1248.29 3.00% 4.80% 1418.30 1468.36 903.25 4.70% 1.50% 0.10% 0.10% 1115.10 1257.64 1257.61 0.00% 1426.19 0.10% 1848.36 0.00% 0.00% 2058.90 2043.94 0.00% 0.20% 2238.83 2673.61 0.80% *Total dividends paid by the 500 stocks in the portfolio, based on the number of shares of each stock in the index, adjusted until the end of the year, assuming they were…
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