Question: The information gives sample average returns and the sample standard deviations of returns on four portfolios and inflation for the time period from 1926-2020. The

The information gives sample average returns and the sample standard deviations

The information gives sample average returns and the sample standard deviations of returns on four portfolios and inflation for the time period from 1926-2020. The series are as follows: Small-company stocks is the return on the smallest decile of NYSE stocks; Large company returns are returns on the S&P 500 and then the largest decile of NYSE/NASDAQ stocks; long-term government bonds (20-year constant maturity portfolio of U. S. Treasury bonds); U.S. Treasury Bill (3-month maturities); Inflation based on CPI. Series Small-company stocks Large-company stocks Long-term government bonds U.S. Treasury Bills Inflation Arithmetic Average Return 16.2% 12.2% 6.1% 3.3% 2.9% Standard Deviation of Returns 31.3% 19.7% 9.8% 3.1% 4.0% a. (3 points) What has been the average risk premium on long-term government bonds over the 1926-2020 period? b. (3 points) What has been the average real rate of return on small-company stocks over the 1926-2020 period

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

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

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

You must write a report including your findings, all relevant information and computations, and provide evidence. For this project, you must download monthly historical data from Jan. 2001 to Dec....

The following information is from Table 10.2 in the textbook and is the same as in the prior problem. The arithmetic average returns and standard deviations (respectively) of historical returns on...

Bartman Industries's and Reynolds Inc.'s stock prices and dividends, along with the Winslow 5000 Index, are shown here for the period 20152020. The Winslow 5000 data are adjusted to include...

ing Risk and Return Search this cour Excel Activity: Evaluating Risk and Return Bartman Industries's and Reynolds Inc's stock prices and dividends, along with the Winslow 5000 Index, are shown here...

1. Assume stocks A and B have had identical stock prices every day for the past three years. Stock A pays a dividend but Stock B does not. Which one of these statements applies to these stocks for...

give a summary of this article please!!! comment on its implications for manager rewards and investors returns. please answer I really need for class!!!! thank you!!!! Portfolio Performance...

Write 2 paragraphs about Macro risks and the term structure of interest rates article. No max word count, page count, or formatting requirements but has to be submit to my tutor's work as my own....

I need your help with this: Can you please quote from the attached chapters / resource if possible? Corporations often use different costs of capital for different operating divisions. Using an...

Dollar returns are generally used less frequently than percentage returns because dollar returns: a.do not account for inflation while stated percentage returns do. b.can only be calculated on an...

If a. Bare the roots of ax + bx +c = 0, and a + h, B+h are the roots of px + qx +r = 0, then a bc (A) 1(b (B) h - 2a b2 - 4ac_q - 4pr (D) (C) h = a

Durbin h statistic. In autoregressive models like Eq. (10.7): Yt = B1 + B2Xt + B3Yt-1 + vt the usual d statistic is not applicable to detect autocorrelation. For such models, Durbin has suggested...

Brief Exercise 6-24 Equivalent Units, No Beginning Work in Process Frankle Manufacturing produces cylinders used in internal combustion engines. During June, Frankles Welding department had the...

10) For a bond that pays cash interest (i.e., not a zero coupon bond), YTM is (a) always equal to the coupon rate (b) always equal to the current yield (c) is always less than the coupon rate (d) can...

Teamwork. Global. Technology. Form teams of three students. Choose a culture you are not totally familiar with but would like to learn more about. Research (through the Internet or interviews) the...

Teamwork. Bring a newspaper,magazine, or book to class. a. Working in a group of four, have one member read aloud for five minutes while the other three members listenone using cautious listening,...

Global. Teamwork. Conduct an in-class debate on whether ineffective listening is strictly an American problem or whether it exists worldwide. Do the secondary research necessary to support your or...