Assume that one of your relatives, on your behalf, invested $100,000 in a trust holding S&P 500 stocks at the beginning of 1926. Using the data in Table 6.6, determine the value of this trust at the end of 2018.

 

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TABLE 6.6 Performance Statistics for Major Financial Assets, 1926-2018 Arithmetic Mean (%) Geometric Standard Minimum Maximum Asset Mean (%) Deviation (%) Value (%) Value (%) Large-Cap Stocks Small-Cap Stocks 10.0 11.9 19.8 -43.34 (1931) 53.99 (1933) 11.8 16.2 31.6 -58.01 (1937) 142.87 (1933) 6.3 -8.09 (1969) 42.56 (1982) Long-tern Corp Bonds 5.9 8.4 Long term Gov't Bonds 5.5 5.9 9.8 -14.90 (2009) 40.36 (1982) Inter-term Gew't 5.1 5.2 5.6 -5.14 (1994) 29.10 (1982) Bonds U.S. Treasury Bills 3.3 3.4 3.1 -0.02 (1938) 14.71 (1981) Inflation 2.9 3.0 4.0 -10.30 (1932) 18.16 (1946) Sourre: Duff & Phelpe, 2019 SBRI Vearbok Sucks Bunds, Belk and Inflation, Roger G. bbotson. TABLE 6.6 Performance Statistics for Major Financial Assets, 1926-2018 Arithmetic Mean (%) Geometric Standard Minimum Maximum Asset Mean (%) Deviation (%) Value (%) Value (%) Large-Cap Stocks Small-Cap Stocks 10.0 11.9 19.8 -43.34 (1931) 53.99 (1933) 11.8 16.2 31.6 -58.01 (1937) 142.87 (1933) 6.3 -8.09 (1969) 42.56 (1982) Long-tern Corp Bonds 5.9 8.4 Long term Gov't Bonds 5.5 5.9 9.8 -14.90 (2009) 40.36 (1982) Inter-term Gew't 5.1 5.2 5.6 -5.14 (1994) 29.10 (1982) Bonds U.S. Treasury Bills 3.3 3.4 3.1 -0.02 (1938) 14.71 (1981) Inflation 2.9 3.0 4.0 -10.30 (1932) 18.16 (1946) Sourre: Duff & Phelpe, 2019 SBRI Vearbok Sucks Bunds, Belk and Inflation, Roger G. bbotson.

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