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Over the past four years, large-company stocks and U.S. Treasury bills have produced the returns stated below. During this period, inflation averaged 2.9 percent. Given this information, the average real rate of return on large-company stocks was . for Treasury bills and the standard deviation for large-company stocks was for Treasury bills. percent as compare to percent as compared to Year1 year2 year3 year4 Percent return on large-company stocks 12 18 Percent return on U.S. Treasury bills 2 3 4 3.

Over the past four years, large-company stocks and U.S. Treasury bills have produced the returns stated below. During this period, inflation averaged 2.9 percent. Given this information, the average real rate of return on large-company stocks was . for Treasury bills and the standard deviation for large-company stocks was for Treasury bills. percent as compare to percent as compared to Year1 year2 year3 year4 Percent return on large-company stocks 12 18 Percent return on U.S. Treasury bills 2 3 4 3.

Essentials Of Investments
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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17.

Over the past four years, large-company stocks and U.S. Treasury bills have produced the following returns. During this period, inflation averaged 2.9 percent. Given this information, the average real rate of return on large-company stocks was ___ percent as compared to ___ percent for Treasury bills. The standard deviation for large-company stocks was ___ compared to ___ for Treasury bills. | | Year 1 | Year 2 | Year 3 | Year 4 | |---------|--------|--------|--------|--------| | Percent return on large-company stocks | 12 | 5 | 9 | 18 | | Percent return on U.S. Treasury bills | 2 | 3 | 3 | 4 | **Select one:** - a. \( \text{D. } 7.87; 0.10; 5.48; 0.82 \) - b. \( \text{E. } 7.87; 1.00; 6.24; 1.01 \) - c. \( \text{C. } 7.87; 0.10; 4.87; 0.67 \) - d. \( \text{D. } 11.00; 0.03; 5.48; 0.82 \) - e. \( \text{A. } 11.00; 0.03; 6.24; 1.01 \) *Description*: This problem involves calculating the average real rate of return and standard deviation for both large-company stocks and U.S. Treasury bills over a four-year period, taking into account the average inflation rate.
Transcribed Image Text:Over the past four years, large-company stocks and U.S. Treasury bills have produced the following returns. During this period, inflation averaged 2.9 percent. Given this information, the average real rate of return on large-company stocks was ___ percent as compared to ___ percent for Treasury bills. The standard deviation for large-company stocks was ___ compared to ___ for Treasury bills. | | Year 1 | Year 2 | Year 3 | Year 4 | |---------|--------|--------|--------|--------| | Percent return on large-company stocks | 12 | 5 | 9 | 18 | | Percent return on U.S. Treasury bills | 2 | 3 | 3 | 4 | **Select one:** - a. \( \text{D. } 7.87; 0.10; 5.48; 0.82 \) - b. \( \text{E. } 7.87; 1.00; 6.24; 1.01 \) - c. \( \text{C. } 7.87; 0.10; 4.87; 0.67 \) - d. \( \text{D. } 11.00; 0.03; 5.48; 0.82 \) - e. \( \text{A. } 11.00; 0.03; 6.24; 1.01 \) *Description*: This problem involves calculating the average real rate of return and standard deviation for both large-company stocks and U.S. Treasury bills over a four-year period, taking into account the average inflation rate.
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