Question

Here are Costaguanan inflation rates and stock market and Treasury bill returns between 1929 and 1933:

  

Year	Inflation	Stock Market Return	T-Bill Return
1929	–0.1	–11.3	6.4
1930	–3.4	–28.3	3.8
1931	–8.7	–47.2	1.2
1932	–13.7	–7.1	0.7
1933	1.3	64.2	0.2

  

a.	What was the real return on the stock market in each year? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Round your answers to 1 decimal place.)

  

Year	Real Return
1929	%
1930	%
1931	%
1932	%
1933	%

  

b.	What was the average real return? (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

   

Average real return

%

   

c.	What was the risk premium in each year? (Negative values should be indicated by a minus sign. Round your answers to 1 decimal place.)

   

Year	Risk Premium
1929	%
1930	%
1931	%
1932	%
1933	%

   

d.	What was the average risk premium? (Negative value should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

   

Average risk premium

%

   

e.	What was the standard deviation of the risk premium? (Do not make the adjustment for degrees of freedom described in footnote16.) (Do not round intermediate calculations. Round your answer to 2 decimal places.)

   

Standard deviation

%

Answer 1