Notice in Figure that 1981 was the top year for nominal bill returns and 1982 was the top year for nominal bond returns. Why do you think that these two years saw such high returns on bonds and bills?

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Return (%) The dots in the figure show the return on each asset class irn every yearfrom 1900-2006. Notice that common stock returns cover a wider range than returns on Treasury bonds or bills. But common stocks also earn the highest average returns 60.0% -1933 50.0% -1982 40.0% 30.0% Source: Triumph of the Optimists, by Elroy Dimson, Paul Marsh, and Mike Staunton, in Global linvestment Returns Yearbook 2007 Published by ABN AMRO, London Updates provided by Dimson, et al. Reprinted with permission 20.0% Ave. Return 2006 -1981 -5.2701-2005 Ave. Return I-2006 -4.0% 1.280 1938 Ave. Return 10.0% -2005 0.0% 2006 -1967 -10.0% -20.0% 30.0% -40.0% -1931 50.0% Stocks Bonds Bills Type of Asset