**Consider the following table for different assets for 1926 through 2020.**| Series | Average return | Standard Deviation ||-------------------------------------|----------------|--------------------|| Large-company stocks | 12.2% | 19.7% || Small-company stocks | 16.2 | 31.3 || Long-term corporate bonds | 6.5 | 8.5 || Long-term government bonds | 6.1 | 9.8 || Intermediate-term government bonds | 5.6 | 5.6 || U.S. Treasury bills | 3.3 | 3.1 || Inflation | 2.9 | 4.0 |---**a. What range of returns would you expect to see 68 percent of the time for large-company stocks?***Note: A negative answer should be indicated by a minus sign. Enter your answers from lowest to highest. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.***b. What about 95 percent of the time?***Note: A negative answer should be indicated by a minus sign. Enter your answers from lowest to highest. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.*| Expected range of returns | % | to | % ||---------------------------|--------|----|-------------|| Expected range of returns | % | to | % |This table provides average return and standard deviation data for various asset classes spanning nearly a century, from 1926 through 2020. The task is to calculate the expected range of returns for large-company stocks using the standard deviation for 68% and 95% of the time, recognizing the importance of both average returns and variability (standard deviation) in asset performance over time.

Consider the following table for different assets for 1926 through 2020. Standard Deviation 19.7% Series Large-company stocks Small-company stocks Long-term corporate bonds Long-term government bonds Intermediate-term government bonds U.S. Treasury bills. Inflation Average return Expected range of returns Expected range of returns 12.29 16.2 6.5 6.1 5.3 3.3 2.9 % to % to a. What range of returns would you expect to see 68 percent of the time for large-company stocks? Note: A negative answer should be indicated by a minus sign. Enter your answers from lowest to highest. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. b. What about 95 percent of the time? 31.3 8.5 9.8 Note: A negative answer should be indicated by a minus sign. Enter your answers from lowest to highest. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. 5.6 3.1 4.0 % %

Consider the following table for different assets for 1926 through 2020. Standard Deviation 19.7% Series Large-company stocks Small-company stocks Long-term corporate bonds Long-term government bonds Intermediate-term government bonds U.S. Treasury bills. Inflation Average return Expected range of returns Expected range of returns 12.29 16.2 6.5 6.1 5.3 3.3 2.9 % to % to a. What range of returns would you expect to see 68 percent of the time for large-company stocks? Note: A negative answer should be indicated by a minus sign. Enter your answers from lowest to highest. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. b. What about 95 percent of the time? 31.3 8.5 9.8 Note: A negative answer should be indicated by a minus sign. Enter your answers from lowest to highest. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. 5.6 3.1 4.0 % %

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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The following return series comes from Global Financial Data. US T-bills CPI Year Large Stocks LT Gov Bonds (Rf asset) (inflation) 2017 21.83% 6.24% 0.80% 2.07% 2018 -5.28% -1.25% 1.81% 2.10% 2019 25.45% 3.35% 2.15% 1.10% 2020 18.16% 10.25% 4.50% 1.88% 2021 28.70% -1.54% 0.40% 7.00% 2022 -19.78% -8.55% 2.20% 6.50% Calculate the average real risk premium earned on large-company stocks using the approximate Fisher equation. (Enter percentages as decimals and round to 4 decimals)
Consider the following average annual returns: Average Return 23.5% 13.1% 7.5% 6.8% 4% Investment Small Stocks S&P 500 Corporate Bonds Treasure Bonds Treasury Bills What is the excess return for corporate bonds? O A. 1.8% OB. 0% OC. 7% OD. 3.5%
Return on risk-free asset = 4.5% Expected return for asset i = 12.75% Expected return on the market portfolio = 9.25% Calculate the risk premium for asset i. A. 3.50% B. 8.25% C. 4.50% D. 4.75% The annual rates of return of Share Z for the last four years are 0.10, 0.15, -0.05, and 0.20. Compute the arithmetic mean annual rate of return for Share Z. Select one: A. 0.04 B. 0.06 C. 0.03 O D. 0.10
Consider the following 3 assets portfolio: Asset US Equity Intl. Equity US Corporate Bonds Correlations US Equity Intl. Equity US Corporate Bonds 18% O 14.95% O 13.36% Weights O 1.79% 50% 30% 20% US Equity What is the portfolio's standard deviation? 1 0.8 0.1 St. Dev. 18% 16.50% 5% Intl. Equity 1 -0.1 US Corporate Bonds 0.1 -0.1 1
Consider the following information on large-company stocks for a period of years. Arithmetic Mean 12.78 3.3 Large-company stocks Inflation a. What was the arithmetic average annual return on large-company stocks in nominal terms? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What was the arithmetic average annual return on large-company stocks in real terms? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Nominal return b. Real return 12.70% 10.26 %
% Return on T-Bills, Stocks and Market Index State of the economy Probability T-Bills Phillips Pay -up Rubber-made Market Index Recession 0.2 7 -22 28 10 -13 Below Average 0.1 7 -2 14.7 -10 1 Average 0.3 7 20 0 7 15 Above Average 0.3 7 35 -10 45 29 Boom 0.1 7 50 -20 30 43 Mean 7 16.9 2.07 19.60 15 Standard Deviation 0 23.4 15.62 18.92 17.71 Coefficient of Variation 0 1.39 7.55 0.97 1.18 Covariance with MP 0 0.04 -0.3 0.02 0.03 Correlation with Market Index 0 1 -1.0 0.69 1 Beta 0 1.32 -0.88 0.74 1 CAPM Req. Return 7 17.54 -0.02 12.89 15.0 Valuation (Overvalued/Undervalued/Fairly valued) Fairly valued Overvalued Undervalued Undervalued Fairly valued Nature of stock Defensive Aggressive Defensive Defensive Defensive Using the data generated plot the…
Current Attempt in Progress To achieve a zero standard deviation for a portfolio, calculate the weights of stock A and stock B, assuming the correlation coefficient is-1. Use the following information. (Round intermediate calculations and final answers to 2 decimal places, e.g. 31.21%.) State of the economy Probability of Expected return on Expected return on occurrence stock A in this state stock B in this state High growth 30% 41.5% 56.5% Moderate growth 25% 21.5% 26.5% Recession 45% -11.5% -21.5% Weight of stock A % Weight of stock B %
Which one of the following categories has the widest frequency distribution of returns for the period 1926-2014? Multiple Choice Small-company stocks U.S. Treasury bills Long-term government bonds Inflation Large-company stock
Answer accurately asap
Compute the annual tracking error from the following information: Quarter Portfolio B's 1 2 3 4 O 1.06% O 2.12% O 3.67% O 4.25% O None Portfolio A's Return (%) 1.15 1.89 1.15 -0.47 Return (%) 1.65 -0.10 0.52 -0.60
8. A portfolio consists of bonds, stocks, commodities and real estates. The portfolio weightings, expected returns, variances and correlation matrix are shown below. Bonds Stocks Commodities Real Estate Correlation Matrix Bonds Stocks Commodities Real Estate Weight 50% 10% 15% 25% Bonds 1.0 Stocks -0.2 1.0 Expected Return 8% 12% 20% 16% Commodities 0.1 0.4 1.0 Variance (%²) 10 30 15 20 Real Estate 0.3 0.6 0.2 1.0 a. Calculate the expected return and the standard deviation of the return of the portfolio.
Forecasted returns for Stock A: State of the Economy Prob. of State Return in State Prosperity 35% 5% Normal 45% 14% Recession 20% -3% What is the standard deviation of the stock’s returns?

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