Answer:
I) Average realized returns during 1950-1999 exceeded the internal rate of return (IRR) for corporate investments; and
III) The reward-to-variability ratio (Sharpe) derived from the DDM is far more stable than that derived from realized returns.
Explanation:
The Fama and French (2002) study of the equity premium puzzle was conducted by Eugene Fama and Kenneth French, who later developed models to describe stock returns.
They conducted the study by breaking their sample onto sub-periods, and they found out that equity premium was largest during the 1950-1999 sub-period.
Therefore they concluded that the equity premium puzzle has occurred mostly in modern times, which was likely due to be due to the difference between the dividend-discount model's (DDM) result of expected return in comparison to realised returns earned. The DDM yields a smaller risk premium during the 1950-1999 period, while realised returns have been higher.
The study also predicts that future excess returns will be significantly lower than those experienced in recent decades.
Answer:
To machinery a/c
Explanation:
machinery a/c is credited as the value of assets is decreased.
Add $53 to the book balance.
The book balance is the company's cash balance according to its accounting records. Your book balance may include transactions that have not yet been cleared or cleared from your bank account. At the end of the accounting period, the company's book inventory is reconciled with the bank balance via monthly account statements.
Posted book balance is the closing balance (posted funds) reported in the daily close (MT940). Depending on your sending bank's policy, this balance may include unbilled items. The Clearing Balance is the "true" interest-bearing balance available calculated on a given date book balance.
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Answer:
correct answer is $1,544
Explanation:
given data
sold = $40,000
mortgage loan = $38,500
solution
we know that here 1 discount point cost of buyer of loan = 1 %
so discount point = $38,500 × 1% = $38,500 × 0.01 = $385
and
Points are always paid on the loan amount = $385 × 4
Points are always paid on the loan amount = $1,540 in discount points
so correct answer is $1,544