Chapter 4.1, Problem 4.9E

(a)

To determine

To find out the approximate highest and lowest annual percent returns on stocks during this period and what were the highest and lowest returns for Treasury bills.

Answer to Problem 4.9E

The highest annual percent returns on stocks is about $50\%$ and the lowest is about $-30\%$ .

The highest return for treasury bill is about $15\%$ and the lowest is about $1\%$ .

Explanation of Solution

The highest annual percent returns on stocks is about $50\%$ and the lowest is about $-30\%$ . The highest return for treasury bill is about $15\%$ and the lowest is about $1\%$ .

(b)

To determine

To describe the pattern we see in question and identify are high interest rates bad for stocks and also is the relationship between interest rates and stock returns strong or weak.

Explanation of Solution

By looking at the graph we can see that there does not seem to be a pattern and thus the relationship is weak. Also high interest rates are also not bad for stocks.