Question: Use the data in Tables 11.1 and 11.4 to answer these questions: a. What was the average rate of return on large U.S. common stocks

Use the data in Tables 11.1 and 11.4 to answer these questions:

a. What was the average rate of return on large U.S. common stocks from 1900 to 2015?

b. What was the average risk premium on large stocks?

c. What was the standard deviation of returns on the market portfolio?

Use the data in Tables 11.1 and 11.4 to answer

Portfolio Standard Deviation (%)
Treasury bills..............................................................................2.9
Long-term government bonds.................................................9.0
Common stocks........................................................................19.9

Average Annual Rate of Return Average Premium Extra return versus Treasury bills) Portfolio Treasury bills Treasury bonds Common stocks 3.8% 1.5% 7.6 11.4

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