The question presented is about the distribution of returns for specific financial instruments over the period of 1926-2006. It asks which option produces the widest bell curve (or distribution) during that time. The options are:- Inflation- Long-term government bonds- Large-company stocks- U.S. Treasury bills- Small-company stocksThe selected answer is:- Small-company stocksA bell curve, often referred to in the context of normal distribution, suggests that the data is symmetrically distributed around a central value, with most of the observations clustering around the mean and fewer observations at the extremes. A "wider" bell curve indicates more variability or volatility in the returns.

The distribution of returns for different asset classes can be compared based on their standard…

The distribution of returns for which one of the following for the period of 1926-2006 produces the widest bell curve (or distribution)? inflation O long-term government bonds large-company stocks O U.S. Treasury bills small-company stocks

The distribution of returns for which one of the following for the period of 1926-2006 produces the widest bell curve (or distribution)? inflation O long-term government bonds large-company stocks O U.S. Treasury bills small-company stocks

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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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 expected return for the stock?
The following return series comes from Global Financial Data. Year Large Stocks LT Gov Bonds US T-bills CPI (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 nominal return earned on large-company stocks. (Enter percentages as decimals and round to 4 decimals)
book nt Consider the following table for a period of six years: Returns U.S. Treasury Year Large-Company Stocks Bills 1 -14.99% 7.35% 2 -26.56 8.02 3 37.29 5.93 4 23.99 5.37 5 -7.28 5.48 6 6.63 7.73 a-1. Calculate the arithmetic average returns for large-company stocks and T-bills over this time period. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. a-2. Calculate the standard deviation of the returns for large-company stocks and T-bills over this time period. Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. int Large-company stocks T-bills a-1. Arithmetic average return a-2. Standard deviation % % % % ences Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. b-1. What was the arithmetic average risk premium over this period? Note: A negative answer should be indicated by a minus sign. Do not…
Annual and Average Returns for Stocks, Bonds, and T-Bills, 1950 to 2019 Stocks Long - Term Treasury Bonds T-bills 1950 to 2019 Average 12.7% 6.6% 4.2% 1950 to 1959 Average20.9 0.0 2.0 1960 to 1969 Average 8.7 1.6 4.0 1970 to 1979 Average 7.5 5.7 6.3 1980 to 1989 Average18.2 13.5 8.9 1990 to 1999 Average 19.0 9.5 4.9 2000 to 2009 Average 0.9 8.0 2.7 2010 Annual Return15.1 9.4 0.01 2011 Annual Return 2.1 29.9 0.02 2012 Annual Return 16.0 3.6 0.02 2013 Annual Return32.4-12.7 0.07 2014 Annual Return 13.7 25.10.05 2015 Annual Return 1.4-1.2 0.21 2016 AnnualReturn 12.0 1.2 0.51 2017 Annual Return 21.8 8.4 1.39 2018 Annual Return -4.4 1.8 1.94 2019 Annual Return 31.5 14.8 2.06 2010 to 2019 Average 14.2 7.7 0.63 You have a portfolio with an asset allocation of 62 percent stocks, 30 percent long-term Treasury bonds, and 8 percent T-bills. Use these weights and the returns given in the above table to compute the return of the portfolio in the year 2010 and each year since. Then compute the…
Suppose interest rates on Treasury bonds rose from 5% to 9% as a result of higher interest ratesin Europe. What effect would this have on the price of an average company’s common stock?
Consider the following information on Stocks A, B, C and their returns (in decimals) in each state: State Prob. of State A Boom 20% 0.34 0.21 0.16 Good 45% 0.13 0.11 0.08 Poor 25% 0.01 0.03 Bust 10% -0.1 -0.06 -0.03 If your portfolio is invested 25% in A, 40% in B, and 35% in C, what is the standard deviation of the portfolio in percent? Answer to two decimals, carry intermediate calcs. to at least four decimals.
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)
Review the following market information: Current Stock Market Return 11.25% Current T-Bill Price $979.43 Historic T-Bill Average Return 2.80% Historic Stock Market Average Return 8.10% Stock Beta 1.23 What is the required return (rounded to two places)?
Select all that are true with respect to historical data on risk and return in the U.S. financial markets since about 1926, Group of answer choices A portfolio of small stocks has earned higher returns than large stocks, with less risk A portfolio of small stocks has earned higher returns that large stocks, with higher risk Stocks have outperformed government bonds, albeit with higher risk With respect to a diversified stock portfolio, the longer the holding period, the higher the risk. With respect to a diversified stock portfolio, the longer the holding period, the lower the risk.
Use the data in the tables below to answer the following questions: Average rates of return on Treasury bills, government bonds, and common stocks, 1900-2017. Average Premium Portfolio Treasury bills Treasury bonds Common stocks Average Annual Rate of Return (%) (Extra return versus Treasury bills) (%) 3.8 5.3 11.5 1.5 7.7 Standard deviation of returns, 1900-2017. Standard Portfolio Deviation (%) Treasury bills 2.9 Long-term government bonds 9.0 Common stocks 19.7 a. What was the average rate of return on large U.S. common stocks from 1900 to 2017? b. What was the average risk premium on large stocks? c. What was the standard deviation of returns on common stocks? (Enter your answer as a percent rounded to 1 decimal place.) a. Average rate of return 11.5 % b. Average risk premium 7.7 % C. Standard deviation of returns 19.7 %
Problem 11-1 Stock Market History (LO1) Use the data in the tables below to answer the following questions: Average rates of return on Treasury bills, government bonds, and common stocks, 1900-2020. Average Premium (Extra Portfolio Treasury bills Treasury bonds Common stocks Average Annual Rate of Return (%) return versus Treasury bills) (%) 3.7 5.4 11.5 1.7 7.8 Standard deviation of returns, 1900-2020. Portfolio Treasury bills Long-term government bonds Common stocks Standard Deviation (%) 2.8 8.9 19.5 a. What was the average rate of return on large U.S. common stocks from 1900 to 2020? b. What was the average risk premium on large stocks? c. What was the standard deviation of returns on common stocks? Note: Enter your answer as a percent rounded to 1 decimal place. a. Average rate of return b. Average risk premium c. Standard deviation of returns % % %
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

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