Alpha Geek

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    Polytechnic State University Sanluis
    Jan-2006 - Nov-2010

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    Polytechnic State University
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Category > Business & Finance Posted 02 Aug 2017 My Price 5.00

Suppose a risky security pays an expected cash flow of $80 in one year. The risk-free rate is

 Suppose a risky security pays an expected cash flow of $80 in one year. The risk-free rate is 4%, and the expected return on the market index is 10%.

  1. If the returns of this security are high when the economy is strong and low when the

economy is weak, but the returns vary by only half as much as the market index, what risk premium is appropriate for this security?

  1. What is the security’s market price?

Answers

Alpha Geek
(8)
Status NEW Posted 02 Aug 2017 05:08 PM My Price 5.00

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