Take a look back at Figure 10.4. There we showed the value of a $1 investment after
Question:
Take a look back at Figure 10.4. There we showed the value of a $1 investment after 95 years. Use the value for the large-company stock investment to check the geometric average in Table 10.3.
Table 10.3
In Figure 10.4, the large-company investment grew to $10,944.66 over 95 years. The geometric average return is thus:
This 10.3 percent is the value shown in Table 10.3. For practice, check some of the other numbers in Table 10.3 the same way.
Figure 10.4
Transcribed Image Text:
Series Small-company stocks Large-company stocks Long-term corporate bonds Long-term government bonds Intermediate-term government bonds U.S. Treasury bills Inflation Geometric Mean 11.9% 10.3 6.2 5.7 5.1 3.3 2.9 Arithmetic Mean 16.2% 12.2 6.5 6.1 5.3 3.3 2.9 Standard Deviation 31.3% 19.7 8.5 9.8 5.6 3.1 4.0
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 25% (4 reviews)
The goal of this exercise is to verify the geometric average return of largecompany stocks as shown ...View the full answer
Answered By
Somshukla Chakraborty
I have a teaching experience of more than 4 years by now in diverse subjects like History,Geography,Political Science,Sociology,Business Enterprise,Economics,Environmental Management etc.I teach students from classes 9-12 and undergraduate students.I boards I handle are IB,IGCSE, state boards,ICSE, CBSE.I am passionate about teaching.Full satisfaction of the students is my main goal.
I have completed my graduation and master's in history from Jadavpur University Kolkata,India in 2012 and I have completed my B.Ed from the same University in 2013. I have taught in a reputed school of Kolkata (subjects-History,Geography,Civics,Political Science) from 2014-2016.I worked as a guest lecturer of history in a college of Kolkata for 2 years teaching students of 1st ,2nd and 3rd year. I taught Ancient and Modern Indian history there.I have taught in another school in Mohali,Punjab teaching students from classes 9-12.Presently I am working as an online tutor with concept tutors,Bangalore,India(Carve Niche Pvt.Ltd.) for the last 1year and also have been appointed as an online history tutor by Course Hero(California,U.S) and Vidyalai.com(Chennai,India).
4.00+
2+ Reviews
10+ Question Solved
Related Book For
Corporate Finance
ISBN: 9781265533199
13th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
Question Posted:
Students also viewed these Business questions
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The stress field (15.1.7) for the screw dislocation produces no tangential or normal forces on a cylinder of finite radius with axis along the dislocation line (z-axis). However, show that if the...
-
Your company has assigned one of its vice presidents to function as your project sponsor. Unfortunately, your sponsor refuses to make any critical decisions, always passing the buck back to you. What...
-
The price of a share of a particular stock listed on the New York Stock Exchange is currently $39. The following probability distribution shows how the price per share is expected to change over a...
-
Reconsider Problem 65. Plot a graph of capital recovery cost versus useful life for lives 1 to 25 by 1. Data from problem 65 Crush Autosmashers can purchase a new electromagnet for moving cars at a...
-
Reporting Net Sales and Expenses with Discounts, Returns, and Bad Debts The following data were selected from the records of Sykes Company for the year ended December 31, 2011.Balances January 1,...
-
In Figure 32.14, the battery has an emf of 12.0 V, the inductance is L, and the capacitance C is 9.0 pF. The switch has been set to position a for a long time so that the capacitor is charged. The...
-
Stock in JRJ Corporation sells for $20 per share and features cumulative voting. There are 10,000 shares outstanding. If three directors are up for election, how much does it cost to ensure yourself...
-
The Sharpe ratio is the average equity risk premium over a period of time divided by the standard deviation. From 1926 to 2020 the average risk premium (relative to Treasury bills) for large-company...
-
Find an equation of the line that satisfies the given conditions. Through (1, 7), slope 2/3
-
A US motivational speaker was brought in by a South African private company as part of its annual general meeting to speak to the sales and marketing staff. Part of the presentation included...
-
1. Despite the higher cost, air freight will likely continue its upward growth. The increasing demand for perishables, chemicals and valuables are some of the key factors in this trend. Delays at...
-
On March 10, Barrett, Inc., declared a $17,000 account receivable from the Lamas Company as uncollectible and wrote off the account. On November 18, Barrett received an $11,000 payment on the account...
-
importance of having corporate governance as per the king 3/king 4 report. illustrate with examples. (30 marks) Critically discuss the barriers and challenges to managing diversity( 20 marks) draft a...
-
On January 1, Hemi Corporation issued $350,000 of 9-year, 8% bonds for $309,086 yielding an effective interest rate (yield to maturity) of 10%. Interest is paid-semi-annually on June 30 and December...
-
Southeastern Airliness daily flight from Atlanta to Charlotte uses a Boeing 737, with all-coach seating for 120 people. In the past, the airline has period every seat at $140 for the one-way flight....
-
Define the term utility software and give two examples.
-
Brozik Corp. has a zero coupon bond that matures in five years with a face value of $60,000. The current value of the companys assets is $57,000, and the standard deviation of its return on assets is...
-
Use the BlackScholes model for pricing a call, putcall parity, and the previous question to show that the BlackScholes model for directly pricing a put can be written as follows: P = E e Rt N(d 2 )...
-
Use the BlackScholes model for pricing a call, putcall parity, and the previous question to show that the BlackScholes model for directly pricing a put can be written as follows: P = E e Rt N(d 2 )...
-
Consider two hypothetical professional leagues, both of which have revenue sharing across teams. League A has much larger national revenue from TV broadcasting rights. It provides a large amount of...
-
Differences Between Accounting and Nonaccounting Majors: There are notable differences in perceptions between accounting and nonaccounting majors. Nonaccounting majors are more likely to hold...
-
Individual Research Project Part 2 Ratio Analysis Due at the end of week 5. Based on the course materials studied during week 1 > Chapter 6 This project is closely aligned with the Course Outcomes...
Study smarter with the SolutionInn App