# Question: What if the last two decades had been normal Download

What if the last two decades had been “normal”? Download the spreadsheet from MyFinanceLab containing the data for Figure 10.1.

a. Calculate the arithmetic average return on the S&P 500 from 1926 to 1989.

b. Assuming that the S&P 500 had simply continued to earn the average return from (a), calculate the amount that $100 invested at the end of 1925 would have grown to by the end of 2011.

c. Do the same for small stocks.

a. Calculate the arithmetic average return on the S&P 500 from 1926 to 1989.

b. Assuming that the S&P 500 had simply continued to earn the average return from (a), calculate the amount that $100 invested at the end of 1925 would have grown to by the end of 2011.

c. Do the same for small stocks.

## Relevant Questions

Consider two local banks. Bank A has 100 loans outstanding, each for $1 million, that it expects will be repaid today. Each loan has a 5% probability of default, in which case the bank is not repaid anything. The chance of ...Based on the data in Table 10.6, estimate which of the following investments you expect to lose the most in the event of a severe market down turn: (1) A $1000 investment in eBay, (2) A $5000 investment in Abbott ...Using the data in Table 11.1,a. Compute the annual returns for a portfolio with 25% invested in North Air, 25% invested in West Air, and 50% invested in Tex Oil.b. What is the lowest annual return for your portfolio in part ...For the portfolio in Problem 23, if the correlation between Johnson & Johnson’s and Walgreen’s stock were to increase,a. Would the expected return of the portfolio rise or fall?b. Would the volatility of the portfolio ...Returning to Problem 38, assume you follow your broker’s advice and put 50% of your money in the venture fund.a. What is the Sharpe ratio of the Tanglewood Fund?b. What is the Sharpe ratio of your new portfolio?c. What is ...Post your question