Use the following Average Return and Standard Deviation numbers for each of the asset classes below...

Use the following Average Return and Standard Deviation numbers for each of the asset classes below to calculate the range of one standard deviation from the mean for each asset class. To provide an example, the range has been calculated for Large Corporate Stocks.

Average Standard

Asset Class Return Deviation Range

Large Company Stocks 11.9% 20.4% (8.5)% to 32.2%

Small Company Stocks 16.7 32.6 ___________

Long-term Corporate Bonds 6.2 8.3 ___________

Long-term Government Bonds 5.9 9.5 ___________

Intermediate-term Govt. Bonds 5.5 5.7 ___________

U.S. Treasury Bills 3.7 3.1 ___________

Inflation Rate 3.1 4.2 ___________

Using the information in the previous problem, what is the risk premium for Long-term Corporate Bonds?

Expert Solution

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jeff jeffy answered 2 years ago

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