Solution for Principles of Corporate Finance 7E CH7精品分析.docVIP

CHAPTER 7 Introduction to Risk, Return, and the Opportunity Cost of Capital Answers to Practice Questions Recall from Chapter 3 that: (1 + rnominal) = (1 + rreal) ? (1 + inflation rate) Therefore: rreal = (1 + rnominal)/(1 + inflation rate) - 1 The real return on the SP 500 in each year was: 1996: 19.2% 1997: 31.2% 1998: 26.6% 1999: 17.8% 2000: -12.1% From the results for Part (a), the average real return was 16.5 percent. c. The risk premium for each year was: 1996: 17.9% 1997: 28.1% 1998: 23.7% 1999: 16.3% 2000: -15.0% d. From the results for Part (c), the average risk premium was 14.