Consider the following information on different asset classes from 1926 through 2017.

Series

Arithmetic Mean

Large-company stocks12.1%

Small-company stocks16.5

Long-term corporate bonds6.4

Long-term government bonds6.0

Intermediate-term government bonds5.2

U.S. Treasury bills3.4

Inflation3.0

a. What was the arithmetic average annual return on large-company stocks in nominal terms? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b.What was the arithmetic average annual return on large-company stocks in real terms? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer rating: 100% (QA)

ANSWER A The average return for six years is computed by summing up the annual returns and divided b... View the full answer