2004 2005 2006 2007 a) 26.03% b) 18.95% c) 20.0% Return d) 118.95 30% Assume it is January 1, 2008 and you feel that these returns are indicative of the equity returns in the future. What return would you use for long-run retirement Olanning? 0% 40% 10%

2004 2005 2006 2007 a) 26.03% b) 18.95% c) 20.0% Return d) 118.95 30% Assume it is January 1, 2008 and you feel that these returns are indicative of the equity returns in the future. What return would you use for long-run retirement Olanning? 0% 40% 10%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

Question

2004
2005
2006
2007
O a) 26.03%
O b) 18.95%
O c) 20.0%
Return
d) 118.95
30%
0%
Assume it is January 1, 2008 and you feel that these returns are indicative of the
equity returns in the future. What return would you use for long-run retirement
planning?
40%
10%

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Based on economists' forecasts and analysis, 1-year Treasury bill rates and liquidity premiums for the next four years are expected to be as follows: R1 = 0.80% = 1.95% E(201) E(3r1) E(41) = 2.05% = 2.35% Years 1 2 3 4 42= 0.07% 43= 0.11% L4= 0.13% Using the liquidity premium theory, determine the current (long-term) rates. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Current (Long-term) Rates % % % %
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