Consider the following table for the total annual returns for a given period of time.SeriesAveragereturnStandardDeviationLarge-company stocks12.3%20.6%Small-company stocks16.433.0Long-term corporate bonds6.28.4Long-term government bonds6.19.4Intermediate-term government bonds5.65.7U.S. Treasury bills3.83.1Inflation3.14.2What range of returns would you expect to see 68 percent of the time for large-company stocks? (A negative answer should beindicated by a minus sign. Input your answers from lowest to highest to receive credit for your answers. Do not roundintermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)Expected range of returns% to%What about 95 percent of the time? (A negative answer should be indicated by a minus sign. Input your answers from lowest tohighest to receive credit for your answers. Do not round intermediate calculations and enter your answers as a percent roundedto 2 decimal places, e.g., 32.16.)Expected range of returns% to%

To find the range of returns for large-company stocks: Requirement 1: To cover 68% of the cases, we…

Answered: Consider the following table for the…

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter7: Types And Costs Of Financial Capital

Section: Chapter Questions

Problem 15DQ

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Consider the following information on different asset classes from 1926 through 2020. Arithmetic Mean 12.2% 16.2 6.5 6.1 5.3 3.3 2.9 Series Large-company stocks Small-company stocks Long-term corporate bonds Long-term government bonds Intermediate-term government bonds U.S. Treasury bills Inflation a. What is the real return on long-term government bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the real return on long-term corporate bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Real return b. Real return % %
Consider the following information for a period of years: Arithmetic Mean Long-term government bonds 7.1 % Long-term corporate bonds 7.2 Inflation 4.2 a. What is the real return on long-term government bonds? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the real return on long-term corporate bonds? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Consider the following information for a period of years: Arithmetic Mean Long-term government bonds 7.6% Long-term corporate bonds 7.7 Inflation 4.6 What is the real return on long-term government bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. What is the real return on long-term corporate bonds? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
Consider the following average annual returns: Average Return 23.5% 13.1% 7.5% 6.8% 4% Investment Small Stocks S&P 500 Corporate Bonds Treasure Bonds Treasury Bills What is the excess return for corporate bonds? O A. 1.8% OB. 0% OC. 7% OD. 3.5%
Consider the following information from 2017. Item T-bills Return 3.6% Corporate bonds 4.7% Stocks Inflation 7.3% 1.6% What is closest to the real return on corporate bonds? 1% 2% 3% 4%
Consider the following average annual returns: Investment Average Return 23.4% Small Stocks S&P 500 13.7% 7.4% Corporate Bonds Treasure Bonds Treasury Bills What is the excess return for corporate bonds? O A. 0% B. 3.1% C. 6.2% O D. 1.6% 6.1% 4.3%
Assume that over the last several decades the total annual returns of large-company common stocks averaged 12.1% small company stocks averaged 16.5% long-term government bonds averaged 6% and us tbills averaged 3.4%. What was the average excess return earned by long-term government bonds and small company stocks respectively?
Consider a portion of monthly return data (In %) on 20-year Treasury Bonds from 2006–2010. Date Return Jan-06 5.12 Feb-06 4.14 ⋮ ⋮ Dec-10 5.47 Date Return Jan-06 5.12 Feb-06 4.14 Mar-06 4.68 Apr-06 5.25 May-06 5.35 Jun-06 3.64 Jul-06 4.68 Aug-06 4.65 Sep-06 3.55 Oct-06 3.55 Nov-06 4.3 Dec-06 3.54 Jan-07 3.8 Feb-07 3.98 Mar-07 4.33 Apr-07 4.69 May-07 5.37 Jun-07 4.74 Jul-07 5.17 Aug-07 3.22 Sep-07 4.97 Oct-07 5.13 Nov-07 3.35 Dec-07 3.86 Jan-08 4.06 Feb-08 4.64 Mar-08 4.83 Apr-08 5.06 May-08 5.46 Jun-08 5.22 Jul-08 4.29 Aug-08 4.79 Sep-08 5.45 Oct-08 4.85 Nov-08 3.54 Dec-08 4.9 Jan-09 3.6 Feb-09 4.48 Mar-09 3.51 Apr-09 3.72 May-09 4.24 Jun-09 4.36 Jul-09 5.17 Aug-09 3.25 Sep-09 4.74 Oct-09 5.03 Nov-09 5.44 Dec-09 3.55 Jan-10 4.21 Feb-10 5.27 Mar-10 5.07 Apr-10 3.7 May-10 4.65 Jun-10 4.21 Jul-10 4.38 Aug-10 4.29 Sep-10 4.93 Oct-10 4.48 Nov-10 3.32 Dec-10 5.47 Estimate a linear trend model with seasonal dummy variables to make forecasts for the first three months of…
Consider the following table for a period of six years: Year 123456 Large- Company Stocks - 16.09% -26.89 37.51 24.21 7.72 6.85 Returns U.S. Treasury Bills 7.57% 8.13 6.15 6.47 5.59 8.06
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 real risk premium earned on large-company stocks using the approximate Fisher equation. (Enter percentages as decimals and round to 4 decimals)
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 real return earned on US T-bills. (Enter percentages as decimals and round to 4 decimals)
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)

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