In Table, why are the average real returns lower than the average nominal returns for each asset class? Is it always true that an assets nominal return is higher than its real return?
Answer to relevant QuestionsSuppose nominal bond returns approximately follow a normal distribution. Using the data in Table, construct a range that should contain 95 percent of historical bond returns. Next, refer to Figure. Is the number of years ...Look at Table. Compare the best and worst years for Tbills in terms of their nominal returns, and then compare the best and worst years in terms of real returns. Comment on what you find. In this problem you will generate a graph similar to Figure 6.8. The table below shows the standard deviation for various portfolios of stocks listed in Table 6.5. Plot the relationship between the number of stocks in the ...Why is the risk-based approach the best method for estimating stocks expected return? What important flaw do both the IRR and PI share? Explain.
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