Figure 5. The mixture of assets defines the spectrum of returns Best, worst, and average returns for various stock/bond allocations, 1926-2016 Portfolio allocation 100% 80% 10% 70% 30% 90% 60% 50% 40% 30% 20% 0% Bonds 0% 10% 20% 40% 50% 60% 70% 80% 90% 100% Stocks Annual returns 60% 54.2% 49.8% 50 45.4% 41.1% 40 36.7% 32.6% 31.2% 32.3% 29.8% 28.4% 27.9% 30 20 10 7.2% 7.7% 8.2% 8.7% 9.1% 9.5% 9.9% 10.2% Average 5.4% 6.0% 6.6% -10 -8.1% -8.2% -10.1% -20 -14.2% -18.4% -22.5% -30 -26.6% -30.7% -40 -34.9% -39.0% -50 -43.1%
Figure 5. The mixture of assets defines the spectrum of returns Best, worst, and average returns for various stock/bond allocations, 1926-2016 Portfolio allocation 100% 80% 10% 70% 30% 90% 60% 50% 40% 30% 20% 0% Bonds 0% 10% 20% 40% 50% 60% 70% 80% 90% 100% Stocks Annual returns 60% 54.2% 49.8% 50 45.4% 41.1% 40 36.7% 32.6% 31.2% 32.3% 29.8% 28.4% 27.9% 30 20 10 7.2% 7.7% 8.2% 8.7% 9.1% 9.5% 9.9% 10.2% Average 5.4% 6.0% 6.6% -10 -8.1% -8.2% -10.1% -20 -14.2% -18.4% -22.5% -30 -26.6% -30.7% -40 -34.9% -39.0% -50 -43.1%
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
Related questions
Question
- Calculate the range of potential annual returns if you invested 10% in bonds and 90% in stocks. How does this range compare with the range of annual returns if you invested 10% in stocks and 90% bonds?
- What might you say to someone whose reason for investing in 90% bonds and 10% stocks is that they want a 6%
return on investment ?
- Use evidence from this graph to explain the value of investing in both stocks and bonds - not just one or the other.
Transcribed Image Text:Figure 5. The mixture of assets defines the spectrum of returns
Best, worst, and average returns for various stock/bond allocations, 1926-2016
Portfolio allocation
100%
80%
10%
70%
30%
90%
60%
50%
40%
30%
20%
0%
Bonds
0%
10%
20%
40%
50%
60%
70%
80%
90%
100%
Stocks
Annual returns
60%
54.2%
49.8%
50
45.4%
41.1%
40
36.7%
32.6%
31.2%
32.3%
29.8%
28.4%
27.9%
30
20
10
7.2%
7.7%
8.2%
8.7%
9.1%
9.5%
9.9%
10.2%
Average
5.4%
6.0%
6.6%
-10
-8.1%
-8.2%
-10.1%
-20
-14.2%
-18.4%
-22.5%
-30
-26.6%
-30.7%
-40
-34.9%
-39.0%
-50
-43.1%
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