Chapter 14 Relationship between assets classes Flashcards
1
Q
Required return
A
RR= Risk free real return + expected inflation + inflation risk premium + risk premium
2
Q
Expected return
A
ER = GRY ER = Yield + Expected growth/ ER = Dividend yield + Expected growth/ ER = Rental yield + Expected yield growth
3
Q
Why nominal return may not equal GRY DR TED
A
Default Reinvestment risk Tax Exchange rate Dealing costs
