View the step-by-step solution to:

Use the data in the tables below to answer the following questions: Average rates of return on Treasury bills, government bonds, and common stocks,...

Use the data in the tables below to answer the following questions:

 

Average rates of return on Treasury bills, government bonds, and common stocks, 1900-2015.

 

Portfolio Average Annual

Rate of Return (%) Average Premium (Extra return

versus Treasury bills) (%)

Treasury bills  3.8    

Treasury bonds  5.3   1.5 

Common stocks  11.4   7.6 


Standard deviation of returns, 1900-2015.

 

Portfolio Standard Deviation (%)

Treasury bills  2.9

Long-term government bonds  9.0 

Common stocks  19.9 


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

Average rate of return _______%


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

Average risk premium _________%


c. What was the standard deviation of returns on common stocks?

Standard Deviation of returns _________%

Recently Asked Questions

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question