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How do you calculate the market risk premium?
The current estimated market risk premium of Australia is 8 percent. This is within the regulatory period January 2010 to June 2014.
What is a person trained in mathematics who calculates risk based on loss percentages and determines insurance rates and premiums?
Understanding how life insurance premiums are calculated can be quite complicated. In essence, your life insurance rates are based on a number of factors such as your ag…e, gender, and health at the time you buy the policy. Since no one can definitely predict when we will die, your risk assessment is made which in turn determines the rate you qualify for. If you are in poor health, have a risky job or hobby, or are a smoker or drinker, the insurance company will charge you higher rates than normal. Underwriters of insurance policies will also check your past medical history and your driving records along with any other health insurance claims as well. After reviewing all this information, the company assigns you a score that affects your final premium rate, which might be nothing close to the quote you originally applied for.
What would happen to the risk premiums on corporate bonds if brokerage commissions were lowered in the corporate bond market?
Lower brokerage commissions for corporate bonds would make them more liquid and thus increase their demand, which would lower their risk premium. hope this helps people on t…heir quizzes for econ!
What is forward premium How does the forward market help in reducing currency risk in international business?
Answer The forward premium arises due to interest differentials between two currencies. In order that the two currencies have the same intrinsic values as they have tod…ay and avoid interest arbitrage, the premium/discount comes into effect.The forward rate includes the forwrd premium/discount and so the risk of spot market moving in the wrong way is minimised by entering into a forward contract.
If the market risk premium were to increase everything else beign equal the value of common stock would do what?
Value of the common stock will go down. As market becomes riskier market participants adjust expected risk premium and start to demand higher returns, consequently they begin …to sell stocks as they do not satisfy their newly adjusted expected risk premium. As a result stock price goes down.
annual base prenium mulply by the rating factor
The amount of interest, that you add to a bond or other instrument, to compensate for the risk that the person or company cannot or will not pay you back. You evaluate the ris…k level using mathematics, statistics, or any other means you find reasonable; then define the risk premium. So if you distribute a lot of bonds, you will statistically win because of the premium. Banks work like this; and many other financial institutions.
If stock beta is 1.2 the risk free rate is 4 and market rate of return is 14 what is the market risk premium?
I'm going to assume that you mean the risk free rate is 4%, or 0.04, and the market rate of return is 14%, or .14. If that is the case, then we solve: Market Rate of R…eturn = (Risk Free Rate) + Beta * (Market Risk Premium) 0.14 = 0.04 + 1.2 * MRP 0.1 = 1.2 * MRP 0.1 / 1.2 = MRP 0.08333... = MRP The Market Risk Premium would be approximately 8.33% This is an example of the Capital Asset Pricing Model, or CAPM.
Risk premium = Company's risk (standard deviation of the historical stock returns of the market as a whole) - Risk-free rate of return (standard deviation of the historical tr…easury bonds' returns) - Inflation
Insurance value x Exchange Rate(USD)xexcess value(0.7/1000)+sales tax(10.3%)=Premium
Risk free rate is 5 and the market risk premium is 6 What is the expected return for the overall stock market What is the required rate of return on a stock that has a beta of 1.2?
Expected return= risk free rate + Risk premium = 11 rate of return on stock= Riskfree rate + beta x( expected market return- risk free rate)
If beta coefficient is 1.4 and the risk free rate is 4.25 and the market risk premium is 5.50 what is the required rate of return?
Require Rate of Return is formulated as: Riskfree Rate + Beta(Risk Premium) Required Rate of Return = 4.25 + 1.4 (5.50) = 11.95%
If beta is 1.8 risk free rate is 5 and expected market risk premium is 12 what is the cost of equity?
5.216 according to CAPM
By McDonald Kang'e Insurance premiums increase because of the following reasons Consumer Price Index (CPI)- to cater for inflation Fraud and Malpractice- These drive the… costs up Human factors like reckless driving and overspeeding Government or statutory body regulations- where the government determines the price Increase in the cost of service delivery eg heath care Company Board of directors- when they demand high returns on investiment and high PBT ratio.