Average Annual Rates Standard Deviation T-Bills Inflation Real T-Bill T-Bills Inflation Real T-Bill Full sample 3.38 1.60 0.46 3.12 4.00 3.76 1927-1951 0.95 1.79 -0.47 1.24 6.04 6.33 1952-2021 4.26 3.46 0.81 3.13 2.89 2.12 Market Big/ Big/ Small/ Small/ (1927-2021) Mean excess return (annualized) Standard deviation (annualized) Index 8.29 18.52 Growth Value Growth Value 8.07 11.69 8.99 15.38 18.35 24.70 26.06 28.21 Suppose that the inflation rate is expected to be 1.60% 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? % % Remains unchanged
Average Annual Rates Standard Deviation T-Bills Inflation Real T-Bill T-Bills Inflation Real T-Bill Full sample 3.38 1.60 0.46 3.12 4.00 3.76 1927-1951 0.95 1.79 -0.47 1.24 6.04 6.33 1952-2021 4.26 3.46 0.81 3.13 2.89 2.12 Market Big/ Big/ Small/ Small/ (1927-2021) Mean excess return (annualized) Standard deviation (annualized) Index 8.29 18.52 Growth Value Growth Value 8.07 11.69 8.99 15.38 18.35 24.70 26.06 28.21 Suppose that the inflation rate is expected to be 1.60% 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? % % Remains unchanged
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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Transcribed Image Text:Average Annual Rates
Standard Deviation
T-Bills
Inflation
Real T-Bill
T-Bills
Inflation
Real T-Bill
Full sample
3.38
1.60
0.46
3.12
4.00
3.76
1927-1951
0.95
1.79
-0.47
1.24
6.04
6.33
1952-2021
4.26
3.46
0.81
3.13
2.89
2.12
Market
Big/
Big/
Small/
Small/
(1927-2021)
Mean excess return (annualized)
Standard deviation (annualized)
Index
8.29
18.52
Growth
Value
Growth
Value
8.07
11.69
8.99
15.38
18.35
24.70
26.06
28.21
Suppose that the inflation rate is expected to be 1.60% 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?
%
%
Remains
unchanged
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