Question: 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

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?

Nominal (%) Real (%) Asset Class Average Best Year WorstYe Average Best Year Worst Year Bills Bonds Stocks 4.0 5.2 11.7 14.7 40.4 57.6 0.0 9.2 43.9 2.3 8.5 19.7 35.1 56.5 -15.1 19.4 38.0

Step by Step Solution

★★★★★

3.27 Rating (159 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Table shows that sometimes though not often an assets nominal return may be higher than its real ret... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

453-B-C-F-R-A-R (749).docx

120 KBs Word File

Students Have Also Explored These Related Corporate Finance Questions!

Is it always true that someone sells a stock because they think it is going to go down in price? How do those words apply to what you've learned in this lesson?

Is it always true that (x y) z = x (y z)?

Is it always true that the probability of finding the electron in the H atom is greater in the interval r dr

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. Nominal (%)...

An investor currently holds the following portfolio: Amount Invested 8,000 shares of Stock A $16,000 Beta = 1.3 15,000 shares of Stock B $48,000 Beta = 1.8 25,000 shares of Stock C $96,000 Beta = 2.2...

Students Home Chepter 56-2018FA BISN-460 x Scvedl Use the following inforn X G Use the following informaion to + C Solutioninrt, LLC USII https:/ D su de s Home + CANALES TV online O buTub" w fardes...

12. The return relative solves the problem of a. inflation b negative returns c. interest rates d. tax differences If the Dow Jones Industrials had a price appreciation of 6 percent one year and ye...

15. A major difference between real and nominal returns is that a. real returns adjust for inflation and nominal returns do not b. real returns use actual cashflows and nominal returns use expected...

Use the following information to compare the recent performance of the S&P 500 Index, the Nasdaq Index, and the Treasury Bill Index from 1983-2003. Each of these index numbers is calculated in a way...

When a consumer withdraws $200 from her savings account and deposits the $200 into her checking account, Question 11 pts When a consumer withdraws $200 from her savings account and deposits the $200...

What is the IRR of the following set of cash flows? Cost-$61,300 CF1 = $18,900 CF2 = $64,500 CF3 = $7,600

In Fig P3.174 the piston drives water at 20°C. Neglecting losses, estimate the exit velocity V2 ft/s. If D2 is further constricted, what is the maximum possible value of V2? D2-4 in Water 1)

13.6 Refer to Exercise 13.4. For each part, write and define the notation that would be used for the population parameter of interest. Make sure that you specify the population(s) to which the...

Let's do something boring just to drive home a point: Count up the number of years in Fig- ure 10.1 in which more than half of the mutual funds managed to beat the S&P 500 index. (Recall that the...

You are interested in using short selling to increase the possible returns from your portfolio.19 you have short sold $200 of ABC and invested $1,200 in DEF. The following data are available on ABC...

Using the following information, calculate the expected return and the standard deviation ofABC. | Probability | ABC stock return (%) State of the economy Depression Recession Normal Boom -5 0.15 0.2...

Five years ago, your dad bought 250 shares of ABC for $6 each and 300 shares of DEF for $7.50 each. He has now given you all his shares, when both stocks are trading at $8. What are the weights of...

please answer all 3! QUESTION 1 Eaton Vance Company has sales of $200,000, Cost of Goods Sold of 100,000, a net income of $15,000, and the following balance sheet: Cash $ 10,000 Accounts payable $...

RAK, Inc., has no debt outstanding and a total market value of dollar 240, 000. Earnings before interest and taxes, EBIT, are projected to be dollar 28,000 if economic conditions are normal. If there...

You own a stock portfolio invested 30 percent in Stock Q, 15 percent in Stock R, 5 percent in Stock S, and 50 percent in Stock T. The betas for these four stocks are 1.49, 1.3, 1.05, and 0.93,...