Question
In: Finance
Suppose you are given the following end of year returns for Large stocks, Long-term Bonds, Treasury...
Suppose you are given the following end of year returns for Large stocks, Long-term Bonds, Treasury Bills, and Inflation. Calculate the average real rate of return earned on Large stocks. (Enter percentages as decimals and round to 4 decimals).
| Year | Large Stocks | Long-term Bonds | T-bills | Inflation |
| 1977 | -7.16% | 2.31% | 5.45% | 6.70% |
| 1978 | 6.57% | -2.07% | 7.64% | 9.02% |
| 1979 | 18.61% | -2.76% | 10.56% | 13.29% |
| 1980 | 32.50% | -5.91% | 12.10% | 12.52% |
| 1981 | -4.92% | -16.00% | 14.60% | 8.92% |
| 1982 | 21.55% | 49.99% | 10.94% | 3.83% |
| 1983 | 22.56% | -2.11% | 8.99% | 3.79% |
| 1984 | 6.27% | 16.53% | 9.90% | 3.95% |
Solutions
Expert Solution
The following are the data inputs in spreadsheet:
The following are the obtained results in spreadsheet:
The percentages entered as decimals and rounded up to 4 decimals
jeff jeffy answered 1 year agoRelated Solutions
Suppose you are given the following end of year returns for Large stocks, Long-term Bonds, Treasury...
Suppose you are given the following end of year returns for
Large stocks, Long-term Bonds, Treasury Bills, and Inflation.
Calculate the correlation between T-bills and Inflation. (Round to
4 decimals). Year Large Stocks Long-term Bonds T-bills Inflation
1977 -7.16% 2.31% 5.45% 6.70% 1978 6.57% -2.07% 7.64% 9.02% 1979
18.61% -2.76% 10.56% 13.29% 1980 32.50% -5.91% 12.10% 12.52% 1981
-4.92% -16.00% 14.60% 8.92% 1982 21.55% 49.99% 10.94% 3.83% 1983
22.56% -2.11% 8.99% 3.79% 1984 6.27% 16.53% 9.90% 3.95%
Historical average returns for Large Company Common Stocks, Long Term Government Bonds, and US Treasury Bills...
Historical average returns for Large Company Common Stocks, Long
Term Government Bonds, and US Treasury Bills for the period 10-year
period of 1999 through 2008 are shown in the following table. Use
these data to solve the next several problems.
Year
Large Common Stock
Long Term Government Bonds
US Treasury Bills
1999
0.2104
-0.0751
0.0480
2000
-0.0910
0.1722
0.0598
2001
-0.1189
0.0551
0.0333
2002
-0.2210
0.1515
0.0161
2003
0.2889
0.0201
0.0094
2004
0.1088
0.0812
0.0114
2005
0.0491
0.0689
0.0279
2006...
Annual and Average Returns for Stocks, Bonds, and T-Bills, 1950 to 2015. Stocks Long-Term Treasury Bonds...
Annual and Average Returns for Stocks, Bonds, and T-Bills, 1950
to 2015.
Stocks
Long-Term Treasury Bonds
T-bills
1950 to 2015
Average
12.6
%
6.6
%
4.40
%
1950 to 1959
Average
20.9
0.0
2.00
1960 to 1969
Average
8.7
1.6
4.00
1970 to 1979
Average
7.5
5.7
6.30
1980 to 1989
Average
18.2
13.5
8.90
1990 to 1999
Average
19.0
9.5
4.90
2000 to 2009
Average
0.9
8.0
2.70
2010
Annual Return
15.1
9.4
0.01
2011
Annual Return
2.1
29.9...
Annual and Average Returns for Stocks, Bonds, and T-Bills, 1950 to 2015. Stocks Long-Term Treasury Bonds...
Annual and Average Returns for Stocks, Bonds, and T-Bills, 1950
to 2015.
Stocks
Long-Term Treasury Bonds
T-bills
1950 to 2015
Average
12.6
%
6.6
%
4.40
%
1950 to 1959
Average
20.9
0.0
2.00
1960 to 1969
Average
8.7
1.6
4.00
1970 to 1979
Average
7.5
5.7
6.30
1980 to 1989
Average
18.2
13.5
8.90
1990 to 1999
Average
19.0
9.5
4.90
2000 to 2009
Average
0.9
8.0
2.70
2010
Annual Return
15.1
9.4
0.01
2011
Annual Return
2.1
29.9...
Suppose we have the following returns for large-company stocks and Treasury bills over a six year...
Suppose we have the following returns for large-company stocks
and Treasury bills over a six year period:
Year
Large
Company
US Treasury
Bill
1
3.92
5.90
2
14.18
2.53
3
19.37
3.76
4
–14.31
7.16
5
–31.80
5.42
6
37.08
6.24
a.
Calculate the arithmetic average returns for large-company
stocks and T-bills over this period. (Do not round
intermediate calculations. Enter your answers as a percent rounded
to 2 decimal places, e.g., 32.16.)
Average
returns
Large company
stocks
%
T-bills...
Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period:...
Suppose we have the following returns for large-company stocks
and Treasury bills over a six-year period:
Year. Large Company. US Treasury Bill
1. 3.99%. 6.65%
2. 14.50. 4.46
3 19.39 4.33
4 -14.29 7.34
5 -31.78 5.44
6 37.10 6.45
a. Calculate the arithmetic average returns for large-company
stocks and T-bills over this period.
b. Calculate the standard deviation of the returns for
large-company stocks and T-bills over this period.
c-1. Calculate the observed risk premium in each year...
Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period:...
Suppose we have the following returns for large-company stocks
and Treasury bills over a six-year period: Year Large Company US
Treasury Bill 1 3.66% 4.66% 2 14.44 2.33 3 19.03 4.12 4 –14.65 5.88
5 –32.14 4.90 6 37.27 6.33 a. Calculate the arithmetic average
returns for large-company stocks and T-bills over this period. (Do
not round intermediate calculations and enter your answers as a
percent rounded to 2 decimal places, e.g., 32.16.) b. Calculate the
standard deviation of the...
Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period:...
Suppose we have the following returns for large-company stocks
and Treasury bills over a six-year period:
Year
Large Company
US Treasury Bill
1
3.69%
4.75%
2
14.48
3.59
3
19.27
4.18
4
–14.41
5.91
5
–31.90
5.32
6
37.51
6.41
a.
Calculate the arithmetic average returns for large-company
stocks and T-bills over this period. (Do not round
intermediate calculations and enter your answers as a percent
rounded to 2 decimal places, e.g., 32.16.)
b.
Calculate the standard deviation of the...
Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period:...
Suppose we have the following returns for large-company stocks
and Treasury bills over a six-year period:
Year
Large Company
US Treasury Bill
1
3.66%
4.66%
2
14.44
2.33
3
19.03
4.12
4
–14.65
5.88
5
–32.14
4.90
6
37.27
6.33
a.
Calculate the arithmetic average returns for large-company
stocks and T-bills over this period. (Do not round
intermediate calculations and enter your answers as a percent
rounded to 2 decimal places, e.g., 32.16.)
b.
Calculate the standard deviation of the...
Suppose we have the following returns for large-company stocks and Treasury bills over a six-period: Year  
Suppose we have the following returns for large-company stocks
and Treasury bills over a six-period:
Year Large
Company US
Treasury Bill
1
3.88%
5.78%
2
14.31
2.45
3
19.05
3.68
4
-14.63
7.12
5
-32.12
4.92
6
37.29
4.89
a. Calculate the arithmetic average returns for large-company
stocks and T-bills over this period.( Do not round intermediate
calculations and enter your answers as a percent rounded to 2
decimal places.)
b. Calculate the standard deviation of the returns for
large-company stocks and...
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