J
jonathans
Member
Hi,
This post is based up exam question 2014 april paper 1 question 2.
From examiners report in (i):
"The required return on a conventional bond includes: • Risk free real yield • Expected future inflation • Inflation risk premium • Credit risk premium and liquidity risk premium".
From acted chapter 24 summary:
"Government bonds: risk-free real yield + expected inflation + inflation risk premium".
A. I understand that conventional=government bond?
B. why did the examiner's report add credit risk? they're assuming the bond might of been issued by a less secure government?
From examiners report in (i):
"The actual investment return on equities includes: • income yield (dividends) • capital growth/(falls)".
From acted chapter 24 summary:
"Equities: dividend yield + expected dividend growth".
C. what do they mean by actual return?
Thanks!
Jonathan
This post is based up exam question 2014 april paper 1 question 2.
From examiners report in (i):
"The required return on a conventional bond includes: • Risk free real yield • Expected future inflation • Inflation risk premium • Credit risk premium and liquidity risk premium".
From acted chapter 24 summary:
"Government bonds: risk-free real yield + expected inflation + inflation risk premium".
A. I understand that conventional=government bond?
B. why did the examiner's report add credit risk? they're assuming the bond might of been issued by a less secure government?
From examiners report in (i):
"The actual investment return on equities includes: • income yield (dividends) • capital growth/(falls)".
From acted chapter 24 summary:
"Equities: dividend yield + expected dividend growth".
C. what do they mean by actual return?
Thanks!
Jonathan