11 Question 1The estimated earnings yield and dividend yield of the stock market are 4% and1.5%, respectively, the yield on 10-year Treasury bonds is 3%, and the yield onMoodys' A rated bond yield is 4.5%, the consensus long-term SP500 earningsgrowth rate forecast is 15%. The market confidence adjustment factor is 0.10.Given these expectations, would you shift your money from the stock market intothe less risky T-bonds? This model is called what?a. YES, shift money from the stock market into T-bonds; Fed Modelb. NO, stay with the stock market; Yardeni Modelc. Need more information on T-bill return and optimal interest rate; Tylor Modeld. NO, stay with the stock market; FCFF model.Question 2Assume that for a country KROW, its inflation is expected to growth by 4%, itspopulation is expected to grow by 2% and labor force participation is expectedto grow by 0.25%. The government budget deficit will grow by 4%. If thespending on new capital inputs is projected to grow at 2.5% and totalproductivity will grow by 0.5%, what is the projected economic growth rate?a. 9.25%b. 5%c. 5.25%d. 13.25%

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Question 1 The estimated earnings yield and dividend yield of the stock market are 4% and 1.5%, respectively, the yield on 10-year Treasury bonds is 3%, and the yield on Moodys' A rated bond yield is 4.5%, the consensus long-term SP500 earnings growth rate forecast is 15%. The market confidence adjustment factor is 0.10. Given these expectations, would you shift your money from the stock market into the less risky T-bonds? This model is called what? YES, shift money from the stock market into T-bonds; Fed Model NO, stay with the stock market; Yardeni Model Need more information on T-bill return and optimal interest rate; Tylor Model NO, stay with the stock market; FCFF model.

Question 1 The estimated earnings yield and dividend yield of the stock market are 4% and 1.5%, respectively, the yield on 10-year Treasury bonds is 3%, and the yield on Moodys' A rated bond yield is 4.5%, the consensus long-term SP500 earnings growth rate forecast is 15%. The market confidence adjustment factor is 0.10. Given these expectations, would you shift your money from the stock market into the less risky T-bonds? This model is called what? YES, shift money from the stock market into T-bonds; Fed Model NO, stay with the stock market; Yardeni Model Need more information on T-bill return and optimal interest rate; Tylor Model NO, stay with the stock market; FCFF model.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 26P

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