Use the data in Tables 11.1 and 11.4 to answer these questions: Table 11.1 Table 11.4 a.
Question:
Use the data in Tables 11.1 and 11.4 to answer these questions:
Table 11.1
Table 11.4
a. What was the average rate of return on large U.S. common stocks from 1900 to 2017?
b. What was the average risk premium on large stocks?
c. What was the standard deviation of returns on the market portfolio?
Average Premlum (Extra return versus Average Annual Rate of Return Portfollo Treasury blls) Portfollo Treasury bills Treasury bonds Common stocks 3.8% 3.8% 5.3 1.5% 11.5 7.7 Portfollo Standard Devlation (%) Treasury bills Long-term government bonds Common stocks 2.9 9.0 19.7
Step by Step Answer:
a For the period 19002017 average rate of ...View the full answer
Fundamentals of Corporate Finance
ISBN: 978-1260566093
10th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
Related Video
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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