Historical returns Calculate the arithmetic average return of U.S. Treasury bills, long-term government bonds, and large-company stocks for 1989 to 1998. Whic had the highest return? Which had the lowest return? On the left side, click on the Spreadsheet Learning Aid to see Table 8.1-Year-by-Year Returns, 1950-1999. What is the average retun of U.S. Treasury bills for 1989 to 19987 % (Round to two decimal places.)

Historical returns Calculate the arithmetic average return of U.S. Treasury bills, long-term government bonds, and large-company stocks for 1989 to 1998. Whic had the highest return? Which had the lowest return? On the left side, click on the Spreadsheet Learning Aid to see Table 8.1-Year-by-Year Returns, 1950-1999. What is the average retun of U.S. Treasury bills for 1989 to 19987 % (Round to two decimal places.)

Fundamentals of Financial Management, Concise Edition (MindTap Course List)

9th Edition

ISBN:9781305635937

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter17: Multinational Financial Management

Section: Chapter Questions

Problem 4DQ

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Use the data in the tables below to answer the following questions: Average rates of return on Treasury bills, government bonds, and common stocks, 1900–2020. 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.
4. How do horizontal analysis and vertical analysis of financial statements differ? 5. “Financial statement users should focus attention on each item showing a large percentage change from one year to the next.” Is this statement correct? Why? 6. What are trend percentages and how are they calculated? What pitfalls must financial statement users avoid when preparing trend percentages? 7. What are common-size financial statements and how are they used? 8. What item is the key figure (that is, 100 percent) in a common-size income statement? A common-size balance sheet
A credit analyst is evaluating the solvency of Alcatel-Lucent (Euronext Paris: ALU) asof the beginning of 2010. Th e following data are gathered from the company’s 2009annual report (in € millions):2009 2008Total equity 4,309 5,224Accrued pension 5,043 4,807Long-term debt 4,179 3,998Other long term liabilities* 1,267 1,595Current liabilities* 9,050 11,687Total equity + Liabilities (equals Total assets) 23,848 27,311*For purposes of this example, assume that these items are non-interest bearing, and that longterm debt equals total debt. In practice, an analyst could refer to Alcatel’s footnotes to confi rmdetails, rather than making an assumption.1 . A . Calculate the company’s fi nancial leverage ratio for 2009.B . Interpret the fi nancial leverage ratio calculated in Part A.2 . A . What are the company’s debt-to-assets, debt-to-capital, and debt-to-equity ratiosfor the two years?B . Is there any discernable trend over the two years?
1, Consider the following table for an eight-year period: Year T-bill return Inflation 1 7.47% 8.53% 2 8.94 12.16 3 6.05 6.76 4 5.97 5.04 5 5.63 6.52 6 8.54 8.84 7 10.74 13.11 8 13.00 12.34 a, Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. b, Calculate the standard deviation of Treasury bill returns and inflation over this time period. c, Calculate the real return for each year. d, What is the average real return for Treasury bills?
The attached file contains hypothetical data for working this problem. Goodman Corporation’s and Landry Incorporated’s stock prices and dividends, along with the Market Index, are shown in the file. Stock prices are reported for December 31 of each year, and dividends reflect those paid during the year. The market data are adjusted to include dividends. The risk-free rate on long-term Treasury bonds is 8.04%. Assume that the market risk premium is 6%. What is the expected return on the market? Now use the SML equation to calculate the two companies' required returns.
Over the past 4 years, large-company stocks and U.S. Treasury bills have produced the returns stated below. During this period, inflation averaged 1.5 percent. Given this information, the average real rate of return on large-company stocks was ___ percent as compared to _____ percent for Treasury bills. Year 1 Year 2 Year 3 Year 4 Return (Large Cap Stocks) 12% 9% 6% 3% Return (U.S. Tsy-bills) 4% 2% 1% 1% Group of answer choices 5.9; -0.5 6.5; -0.5 5.9; 0.5 6.5; 0.5 6.5; 0.0
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
Consider the following table for an eight-year period: Year T-bill return Inflation 1 7.47 % 8.53 % 2 8.94 12.16 3 6.05 6.76 4 5.97 5.04 5 5.63 6.52 6 8.54 8.84 7 10.74 13.11 8 13.00 12.34 Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Average return for Treasury bills % Average annual inflation rate % Calculate the standard deviation of Treasury bill returns and inflation over this time period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Standard deviation of Treasury bills % Standard deviation of inflation % Calculate the real return for each year. (A negative answer should be indicated by a minus sign. Leave no cells…
Refer to the financial state-ment data for Abercrombie Fitch in Problem 4.25 in Chapter 4. Exhibit 5.16 presents risk ratios for Abercrombie Fitch for fiscal Year 3 and Year 4. Exhibit 5.16 REQUIRED a. Compute the amounts of these ratios for fiscal Year 5. b. Assess the changes in the short-term liquidity risk of Abercrombie Fitch between fiscal Year 3 and fiscal Year 5 and the level of that risk at the end of fiscal Year 5. c. Assess the changes in the long-term solvency risk of Abercrombie Fitch between fiscal Year 3 and fiscal Year 5 and the level of that risk at the end of fiscal Year 5.
Calculate WACC? Given corporate tax 35%. Debt MV 20m (RRR6%) Preferred stock MV 10m (RRR8) Common stock MV 50m (RRR12)
is it possible to get the answer to the second part of the question rather than the first. You have the following initial information on CMR Co. on which to base your calculationsand discussion for questions 1) and 2):• Current long-term and target debt-equity ratio (D:E) = 1:4• Corporate tax rate (TC) = 30%• Expected Inflation = 1.75%• Equity beta (E) = 1.6385• Debt beta (D) = 0.2055• Expected market premium (rM – rF) = 6.00%• Risk-free rate (rF) = 2.15%1) The CEO of CMR Co., for which you are CFO, has requested that you evaluate apotential investment in a new project. The proposed project requires an initial outlay of$7.15 billion. Once completed (1 year from initial outlay) it will provide a real net cashflow of $575 million in perpetuity following its completion. It has the same business riskas CMR Co.’s existing activities and will be funded using the firm’s current target D:Eratio.a) What is the nominal weighted-average cost of capital (WACC) for this project?b) As CFO, do you…
Refer to Table 12.2. a. What is the historical real return on long-term government bonds? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the historical real return on long-term corporate bonds? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) TABLE 12.2 Average Annual Returns: 1926-2019 Investment Average Return Large-company stocks 12.1% Small-company stocks 16.3 Long-term corporate bonds 6.4 Long-term government bonds 6.0 U.S. Treasury bills 3.4 Inflation 2.9 Source: 2020 SBBI Yearbook. Duff & Phelps.