I invest in stocks for the same reason that Willie Sutton robbed banks: When asked why he robbed banks, Sutton simply replied, "Because that's where the money is." Asset Class Nominal Average Standard Deviation Annual Returns of Returns 1981-2020 1981-2020 Large company stocks 12.64% 16.06% Baa bonds 10.34% 7.67% 8.21% 9.92% 3.94% 3.39% Inflation 2.93% 1.76% Table 12.4 Arithmetic Average Annual Returns and Standard Deviation by Asset Class, 1981-2020 (source: Aswatch Damodaran Online) 1. Take the average returns expected from the four investments (not inflation) and divide them by the deviation (risk estimate). How do they rank from best to worst on return/risk? 10-year T-bonds US T-bills

I invest in stocks for the same reason that Willie Sutton robbed banks: When asked why he robbed banks, Sutton simply replied, "Because that's where the money is." Asset Class Nominal Average Standard Deviation Annual Returns of Returns 1981-2020 1981-2020 Large company stocks 12.64% 16.06% Baa bonds 10.34% 7.67% 8.21% 9.92% 3.94% 3.39% Inflation 2.93% 1.76% Table 12.4 Arithmetic Average Annual Returns and Standard Deviation by Asset Class, 1981-2020 (source: Aswatch Damodaran Online) 1. Take the average returns expected from the four investments (not inflation) and divide them by the deviation (risk estimate). How do they rank from best to worst on return/risk? 10-year T-bonds US T-bills

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 1P

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Reserves Treasury Securities Real Estate Loans Commercial Loans O 7.69%, No O 8.14%, Yes Assets O 7.27%, No O 6.45%, Yes Table 10 $15 $10 $64 $66 Use Table 10 to calculate the risk weighted capital ratio of First National Bank. Is it well capitalized? Use weights of zero for risk free assets and 0.95 for risky assets. Deposits Capital Liabilities $145 ?