1) Based on the following information, calculate the risk of each asset class in relation to its...
Question:
2) Run the same calculations except this time take into account a 2% inflation factor that will affect the real return on each asset class.
Asset Class Geometric Mean (%) Standard Deviation (%) 12.83% Large Co. Stocks 9.75% Small Co. Stocks Govemment Bonds 14.87% 18.55% 4.10% 2.58% 4.81% Corporate Bonds 2.36%
Step by Step Answer:
1 Risk standard deviation In relation to its annual historic return in relation to its geomet...View the full answer
College Physics
ISBN: 978-0495113690
7th Edition
Authors: Raymond A. Serway, Jerry S. Faughn, Chris Vuille, Charles A. Bennett
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Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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