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Suppose that the inflation rate is expected to be 2.05% in the near future using the historical data provided in Table 5.3 and Tab what would be your predictions for the following? Note: Round your answers to 2 decimal places. a. The T-bill rate? b. The expected rate of return on the Big/Value portfolio? c. The risk premium on the stock market? % %

Suppose that the inflation rate is expected to be 2.05% in the near future using the historical data provided in Table 5.3 and Tab what would be your predictions for the following? Note: Round your answers to 2 decimal places. a. The T-bill rate? b. The expected rate of return on the Big/Value portfolio? c. The risk premium on the stock market? % %

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Average Annual Rates T-Bills Inflation Full sample 1927-1951 3.38 2.05 0.95 1.79 1952-2021 4.26 3.46 Mean excess return (annualized) (1927-2021) Standard deviation (annualized) Standard Deviation Real T-Bill T-Bills Inflation Real T-Bill 0.46 3.12 4.00 3.76 -0.47 1.24 6.04 6.33 0.81 3.13 2.89 2.12 Market Index 8.29 18.52 Big/ Big/ Small/ Small/ Growth Value Growth Value 8.07 18.35 11.69 8.99 15.38 24.70 26.06 28.21 Suppose that the inflation rate is expected to be 2.05% in the near future using the historical data provided in Table 5.3 and Table 5.5 what would be your predictions for the following? Note: Round your answers to 2 decimal places. a. The T-bill rate? % b. The expected rate of return on the Big/Value portfolio? c. The risk premium on the stock market? %
Transcribed Image Text:Average Annual Rates T-Bills Inflation Full sample 1927-1951 3.38 2.05 0.95 1.79 1952-2021 4.26 3.46 Mean excess return (annualized) (1927-2021) Standard deviation (annualized) Standard Deviation Real T-Bill T-Bills Inflation Real T-Bill 0.46 3.12 4.00 3.76 -0.47 1.24 6.04 6.33 0.81 3.13 2.89 2.12 Market Index 8.29 18.52 Big/ Big/ Small/ Small/ Growth Value Growth Value 8.07 18.35 11.69 8.99 15.38 24.70 26.06 28.21 Suppose that the inflation rate is expected to be 2.05% in the near future using the historical data provided in Table 5.3 and Table 5.5 what would be your predictions for the following? Note: Round your answers to 2 decimal places. a. The T-bill rate? % b. The expected rate of return on the Big/Value portfolio? c. The risk premium on the stock market? %
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