Connect Only Problem 9-11 Asset Allocation (LG9-2, LG9-5) Annual and Average Returns for Stocks, Bonds, and T-Bills, 1950 to 2017 Long-Term Treasury Stocks Bonds T-bills 1950 to 2019 1950 to 1959 1960 to 1969 1970 to 1979 Average 12.7% 6.6% 4.2% 1980 to 1989 1990 to 1999 Average Average Average Average 20.9 0.0 2.0 8.7 1.6 4.0 7.5 5.7 6.3 18.2 13.5 8.9 Average 19.0 9.5 4.9 2000 to 2009 Average 0.9 8.0 2.7 2010 Annual Return 2011 Annual Return 15.1 9.4 0.01 2.1 29.9 0.02 2012 Annual Return 16.0 3.6 0.02 2013 Annual Return 32.4 -12.7 0.07 2014 Annual Return 13.7 25.1 0.05 2015 Annual Return 1.4 -1.2 0.21 2016 2017 Annual Return Annual Return 12.0 1.2 0.51 21.8 8.4 1.39 2018 Annual Return -4.4 -1.8 1.94 2019 Annual Return 2010 to 2019 Average 31.5 14.8 2.06 14.2 7.7 0.63 You have a portfolio with an asset allocation of 39 percent stocks, 40 percent long- term Treasury bonds, and 21 percent T-bills. Use these weights and the returns given in the above table to compute the return of the portfolio in the year 2010 and each year since. Then compute the average annual return and standard deviation of the portfolio. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. 2010 Portfolio Return 9.8 % 2011 % 2012 7.7% 2013 7.4 % 2014 15.6 % 2015 0.1 % 2016 5.3 % 2017 12.2% 2018 % 2019 % Average 8.8 % Standard deviation %

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.1.1MBA

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Problem 9-27 Asset Allocation (LG9-2, LG9-5) Annual and Average Returns for Stocks, Bonds, and T-Bills, 1950 to 2017

You have a portfolio with an asset allocation of 39 percent stocks, 40 percent long-term Treasury bonds, and 21 percent T-bills. Use these weights and the returns given in the above table to compute the return of the portfolio in the year 2010 and each year since. Then compute the average annual return and standard deviation of the portfolio.

Note: Do not round intermediate calculations. Round your answers to 2 decimal places.

Connect Only Problem 9-11 Asset Allocation (LG9-2, LG9-5)
Annual and Average Returns for Stocks, Bonds, and T-Bills, 1950 to 2017
Long-Term Treasury
Stocks
Bonds
T-bills
1950 to 2019
1950 to 1959
1960 to 1969
1970 to 1979
Average
12.7%
6.6%
4.2%
1980 to 1989
1990 to 1999
Average
Average
Average
Average
20.9
0.0
2.0
8.7
1.6
4.0
7.5
5.7
6.3
18.2
13.5
8.9
Average
19.0
9.5
4.9
2000 to 2009
Average
0.9
8.0
2.7
2010 Annual Return
2011 Annual Return
15.1
9.4
0.01
2.1
29.9
0.02
2012 Annual Return
16.0
3.6
0.02
2013 Annual Return
32.4
-12.7
0.07
2014 Annual Return
13.7
25.1
0.05
2015 Annual Return
1.4
-1.2
0.21
2016
2017 Annual Return
Annual Return
12.0
1.2
0.51
21.8
8.4
1.39
2018 Annual Return
-4.4
-1.8
1.94
2019 Annual Return
2010 to 2019 Average
31.5
14.8
2.06
14.2
7.7
0.63
You have a portfolio with an asset allocation of 39 percent stocks, 40 percent long-
term Treasury bonds, and 21 percent T-bills. Use these weights and the returns given
in the above table to compute the return of the portfolio in the year 2010 and each
year since. Then compute the average annual return and standard deviation of the
portfolio.
Note: Do not round intermediate calculations. Round your answers to 2 decimal
places.

2010
Portfolio Return
9.8 %
2011
%
2012
7.7%
2013
7.4 %
2014
15.6 %
2015
0.1 %
2016
5.3 %
2017
12.2%
2018
%
2019
%
Average
8.8 %
Standard deviation
%

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