Consider the following information on large-company stocks for a period of years.
Series
Arithmetic Mean
Large-company stocks 14.1 % Small-company stocks 16.4 Long-term corporate bonds 6.2 Long-term government bonds 6.1 Intermediate-term government bonds 5.6 U.S. Treasury bills 3.8 Inflation 4.0
1) What was the arithmetic average annual return on large-company stocks in nominal terms? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
2) What was the arithmetic average annual return on large-company stocks in real terms? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
| Consider the following information on large-company stocks for a period of years. |
| Series | Arithmetic Mean | |
| Large-company stocks | 14.1 | % |
| Small-company stocks | 16.4 | |
| Long-term corporate bonds | 6.2 | |
| Long-term government bonds | 6.1 | |
| Intermediate-term government bonds | 5.6 | |
| U.S. Treasury bills | 3.8 | |
| Inflation | 4.0 | |
1) What was the arithmetic average annual return on large-company stocks in nominal terms? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
2) What was the arithmetic average annual return on large-company stocks in real terms? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
Related questions
| Consider the following information on large-company stocks for a period of years. |
| Series | Arithmetic Mean | |
| Large-company stocks | 14.5 | % |
| Small-company stocks | 16.4 | |
| Long-term corporate bonds | 6.2 | |
| Long-term government bonds | 6.1 | |
| Intermediate-term government bonds | 5.6 | |
| U.S. Treasury bills | 3.8 | |
| Inflation | 4.4 | |
| Required: |
| (a) | What was the arithmetic average annual return on large-company stocks in nominal terms? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
| Nominal return | % |
| (b) | What was the arithmetic average annual return on large-company stocks in real terms? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
| Real return | % |
Consider the following table for a period of six years.
| Returns | |||||||
| Year | Large-Company Stocks | U.S. Treasury Bills | |||||
| Year 1 | â | 15.89 | % | 7.53 | % | ||
| Year 2 | â | 26.83 | 8.11 | ||||
| Year 3 | 37.47 | 6.11 | |||||
| Year 4 | 24.17 | 6.27 | |||||
| Year 5 | â | 7.64 | 5.57 | ||||
| Year 6 | 6.81 | 8.00 | |||||
| Requirement 1: |
| Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) |
| Arithmetic average returns | |
| Large-company stock | % |
| T-bills | % |
| Requirement 2: |
| Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period. (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) |
| Standard deviation | |
| Large-company stock | % |
| T-bills | % |
| Requirement 3: | |
| Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. | |
| (a) | What was the arithmetic average risk premium over this period? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
| Risk premium | % |
| (b) | What was the standard deviation of the risk premium over this period? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) |
| Risk premium standard deviation | % |
