Average Annual Rates Standard Deviation T-Bills Inflation Real T-Bill T-Bills Inflation Full sample 3.38 2.05 0.46 3.12 4.00 1927-1951 1952-2021 0.95 1.79 -0.47 1.24 6.04 4.26 3.46 0.81 3.13 2.89 (1927-2021) Mean excess return (annualized) Standard deviation (annualized) Market Index 8.29 18.52 Big/ Big/ Small/ Small/ Growth Value Growth Value 8.07 18.35 11.69 8.99 15.38 24.70 26.06 28,21 Real T-Bill 3.76 6.33 2.12 Suppose that the inflation rate is expected to be 2.05% in the near future using the historical data provided in Table 5.3 and Table what would be your predictions for the following? Note: Round your answers to 2 decimal places. a. The T-bill rate? b. The expected rate of return on the Big/Value portfolio? c. The risk premium on the stock market? % %

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Nikulbhai 

Average Annual Rates.
T-Bills
Inflation. Real T-Bill
T-Bills
Full sample
3.38
2.05
0.46
3.12
1927-1951
1952-2021
0.95
1.79
-0.47
1.24
4.26
3.46
0.81
3.13
(1927-2021)
Mean excess return (annualized)
Standard deviation (annualized)
Standard Deviation
Inflation
4.00
6.04
2.89
Market
Big/
Big/
Small/
Small/
Index
Growth
Value
Growth
Value
8.29
18.52
8.07
18.35
11.69
8.99
15.38
24.70
26.06
28.21
Real T-Bill
3.76
6.33
2.12
Suppose that the inflation rate is expected to be 2.05% in the near future using the historical data provided in Table 5.3 and Table 5.5
what would be your predictions for the following?
Note: Round your answers to 2 decimal places.
a. The T-bill rate?
b. The expected rate of return on the Big/Value portfolio?
c. The risk premium on the stock market?
%
%
Transcribed Image Text:Average Annual Rates. T-Bills Inflation. Real T-Bill T-Bills Full sample 3.38 2.05 0.46 3.12 1927-1951 1952-2021 0.95 1.79 -0.47 1.24 4.26 3.46 0.81 3.13 (1927-2021) Mean excess return (annualized) Standard deviation (annualized) Standard Deviation Inflation 4.00 6.04 2.89 Market Big/ Big/ Small/ Small/ Index Growth Value Growth Value 8.29 18.52 8.07 18.35 11.69 8.99 15.38 24.70 26.06 28.21 Real T-Bill 3.76 6.33 2.12 Suppose that the inflation rate is expected to be 2.05% in the near future using the historical data provided in Table 5.3 and Table 5.5 what would be your predictions for the following? Note: Round your answers to 2 decimal places. a. The T-bill rate? b. The expected rate of return on the Big/Value portfolio? c. The risk premium on the stock market? % %
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