a15.The market risk premium: a.varies over time as both the risk-free rate of return and the market rate of return vary. b.plus the risk-free rate of return equals the cost of capital for any firm with a beta of zero. c.is equal to one percent for a risk-free asset. d.is equ...
FRM一级习题集经典题:风险管理基础.docx,Jennifer Durant is evaluating the existing risk management system of Silverman Asset Management. She is asked to match the following events to the corresponding type of risk. Identify each numbered event as a market
Market risk premium is defined as the difference between the market rate of return and the return on risk-free Treasury bills. a. True b. False A term associated with future value is "compounding"; a term associated with present value is "discounting". a. True b. Fal...
Find the difference: expected return on stocks minus risk-free return equals the equity risk premium. We're looking at expected returns that are long-term, real,compound, and pre-tax. "Long-term" means somewhere in the neighborhood of 10 years. Short horizons raise questions aboutmarket timing...
Box spreads are like synthetic loans. Like a zero-coupon bond, they are initially bought at a discount and the price steadily rises over time until expiration, when it equals the distance between strikes. Spread Risks As with any other trade in the market, spread trading comes withmarket ris...
The purpose of the CAPM is to try and equate a stock's required return to its perceived level of risk. True or False? Explain. The CAPM states that the expected risk premium on any security equals its beta times the market risk premium. a. True b....
60 days. You can remove the risk of loss due to a devaluation of the dollar by: a.Selling dollars in the forward market for 60-day delivery. b.Buying dollars now and selling it at the end of 60 days. c.Selling the yuan equivalent in the forward market for 60-day delivery. ...
D) the risk premium of 75 stocks on the market premium for the years 1998-2006. Answer: B 18) Panel data is also called A) longitudinal data. B) cross-sectional data. C) time series data. D) experimental data. Answer: A 19) (Requires Appendix material) When the fifth assumption in...
The firm’s value equals the multiplication of the sector-specific capital stock and the well-known Tobin’s q. The investment expenditure of the remaining four (non-dividend maximising) firms is a fixed fraction of gross profit. Since the majority of the CGE literature uses static or ...
The Gordon Model is a useful concept to know when evaluating properties with growing cash flows. However, it’s not a one-size fit all solution and has several built-in limitations. For example, what if the growth rate equals the discount rate? This would yield an infinite value, which of...