Introduction to Corporate Finance

Ross et al.: Fundamentals

of Corporate Finance, Sixth

Edition, Alternate Edition

V. Risk and Return 13. Return, Risk, and the

Security Market Line

(^480) © The McGraw−Hill
Companies, 2002
dividend payments over the next year. Now go to http://www.cnnfn.com, follow the
“Bonds & Rates” link, the “Latest Rates” link and find the current interest rate for
three-month Treasury bills. Using this information, calculate the expected return
on the market using the reward-to-risk ratio. Does this number make sense? Why
or why not?
Spreadsheet Templates13–11, 13–17, 13–23, 13–24, 13–27
452 PART FIVE Risk and Return
A B C D
E F G H
321
654
987
112110
1143
Using a spreadsheet for time value o
If we invest $ 25 ,0 (^00) at (^12) percent, howf lomnogn uey calculations
for the unknown of periods, so (^) we use the formnatil wl NPeE hR (avrae $te p, 50 ,m (^00) t, (^0) p? (^) vWfve need to solve
)
RFautPerte (urserean^ Vet)ta Vluaelu (fe (v)pv)
ThPe foeriods:
rmal entered in cell B 10 is = NPER: notic
has a negative sign on it. Also notice tha rtate is een thtereat pd amst is (^) d zecimeroa anl, ndo tt hat pv
a percentage.
$ 5 $ 0025 ,0,^00000
6 .1 1625. 512