Assume these were the inflation rates and U.S. stock market and Treasury bill returns between 1929 and 1933: ITTT Stock Market Return(X) -16.e -27.2 T-Bill Year Inflation (%) Return(%) 6.e 3.0 1929 e.4 1930 -4.4 -9.1 -11.1 1.1 1931 -41.9 -8.5 63.6 1.2 1932 e.9 1933 e.3 a. What was the real return on the stock market in each year? b. What was the average real return? c. What was the risk premlum in each year? d. What was the average risk premium?

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
icon
Related questions
Question

The Sub Parts To Be Solved

Assume these were the Inflation rates and U.S. stock market and Treasury bill returns between 1929 and 1933:
Stock Market
T-BI11
Year
Inflation(%)
Return(X)
Return(%)
6.e
1929
e.4
-16.e
1930
-4.4
-27.2
3.e
1931
-9.1
-41.9
1.2
1932
-11.1
-8.5
0.9
1933
1.1
63.6
e.3
a. What was the real return on the stock market in each year?
b. What was the average real return?
c. What was the risk premlum in each year?
d. What was the average risk premlum?
Complete this question by entering your answers in the tabs below.
Required A
Required B
Required C
Required D
What was the real return on the stock market in each year? (Negative answers should be indicated by a minus sign. Do not
round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.)
Year
Real Return
%
%
%
1929
1930
1931
1932
1933
%
< Required A
Required B >
Transcribed Image Text:Assume these were the Inflation rates and U.S. stock market and Treasury bill returns between 1929 and 1933: Stock Market T-BI11 Year Inflation(%) Return(X) Return(%) 6.e 1929 e.4 -16.e 1930 -4.4 -27.2 3.e 1931 -9.1 -41.9 1.2 1932 -11.1 -8.5 0.9 1933 1.1 63.6 e.3 a. What was the real return on the stock market in each year? b. What was the average real return? c. What was the risk premlum in each year? d. What was the average risk premlum? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D What was the real return on the stock market in each year? (Negative answers should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Year Real Return % % % 1929 1930 1931 1932 1933 % < Required A Required B >
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 4 images

Blurred answer
Knowledge Booster
Relevant cost analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education