Fundamentals Of Corporate Finance, 9th Edition
Fundamentals Of Corporate Finance, 9th Edition
9th Edition
ISBN: 9781260052220
Author: Richard Brealey; Stewart Myers; Alan Marcus
Publisher: McGraw-Hill Education
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Chapter 11, Problem 12QP
Summary Introduction

To discuss: Whether person X hope the index D in 2016 to be extra or fewer probable to change up or down by additional than 40 points in a day than in 2009.

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Risk Premiums. Here are rates of return on a broad stock market index and on Treasury bills between 2013 and 2017: (LO11-1) 6. Year Stock Market Return (%) T-Bill Return (%) 2013 31.7% 0.02% 2014 10.9 0.02 2015 -1.6 0.02 2016 13.0 0.20 2017 21.3 0.80 a. What was the risk premium on common stock in each year? b. What was the average risk premium? c. What was the standard deviation of the risk premium? ear, it pays a divi-
Assume these are the stock market and Treasury bill returns for a 5-year period: Stock Market T-Bill Return (%) 0.02 0.02 0.02 0. 20 Return (%) Year 2013 2014 2015 2016 2017 31.7 10.9 -1.6 13.0 21.3 0.80 Required: a. What was the risk premium on common stock in each year? (Negative values should be entered with a negative sign.) b. What was the average risk premium? c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)
What are some comments that can be made on this?   The stock market crash of 2020 is the largest index point plunge in U.S history. Starting March 9 2020, the Dow Jones Industrial Average index suffered one of three point drops. This is sufficient because stock market indexes are a measure of market sentiment. The most common stock indexes are the Dow Jones industrial average, S and P 500, and the Nasdaq stock market composite. The Dow Jones index is price averages while the s and p 500 and the nasdaq stock market composite are market capitalization weighted. When the Dow Jones drops 20.3% in a matter of days, this meant that there were negative market sentiment factors at play. At the time before this occurrence, the threat of the corona virus had investors worried. There would soon be a shutdown which would cause record unemployment and would significantly decrease purchasing power. This caused investors to move their capital into safer investments. In this case it was the bond…
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Stock Market Index Definition (BEGINNER FRIENDLY EXPLANATION!); Author: It's Your Girl Rose;https://www.youtube.com/watch?v=LxI12aUaabc;License: Standard Youtube License