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 Annual Average Premium (Extra Rate of Return return versus Treasury bills) (%) (%) Portfolio Treasury bills Treasury bonds Common stocks Standard deviation of returns, 1900-2020. Portfolio Treasury bills Long-term government bonds Common stocks 3.7 5.4 11.5 Standard Deviation (%) a. Average rate of return b. Average risk premium c. Standard deviation of returns 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? 1.7 7.8 Note: Enter your answer as a percent rounded to 1 decimal place. % % %

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 Annual Average Premium (Extra Rate of Return return versus Treasury bills) (%) (%) Portfolio Treasury bills Treasury bonds Common stocks Standard deviation of returns, 1900-2020. Portfolio Treasury bills Long-term government bonds Common stocks 3.7 5.4 11.5 Standard Deviation (%) a. Average rate of return b. Average risk premium c. Standard deviation of returns 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? 1.7 7.8 Note: Enter your answer as a percent rounded to 1 decimal place. % % %

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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QUESTION 1 Which of the following data best represents a sample? The daily returns of SABIC'S stock for the year 2021. The daily S&P 500 returns for the year 2021 as a representative of U.S. stock returns. The daily returns of stocks trading above $100 for the year 2021. None of the above QUESTION 2 Which of the following is measured with a categorical nominal scale? Mutual funds' investment style. Mutual funds' asset allocation weights. Mutual funds' age class. None of the above. 0000
Assume these are the stock market and Treasury bill returns for a 5-year period: Year 2016 2017 2018 2019 2020 Stock Market Return (%) 33.30 13.20 -3.50 14.50 23.80 Required: a. What was the risk premium on common stock in each year? b. What was the average risk premium? c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) 3 Required A Required B T-Bill Return Complete this question by entering your answers in the tabs below. Standard deviation (%) 0.12 0.12 0.12 0.07 0.09 x Answer is complete but not entirely correct. Required C What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. 13.69 X % घ
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. Portfolio Average Annual Rate of Return (%) Average Premium (Extra return versus Treasury bills) (%) Treasury bills 3.7 Treasury bonds 5.4 1.7 Common stocks 11.5 7.8 Standard deviation of returns, 1900–2020. Portfolio Standard Deviation (%) Treasury bills 2.8 Long-term government bonds 8.9 Common stocks 19.5 What was the average rate of return on large U.S. common stocks from 1900 to 2020? What was the average risk premium on large stocks? What was the standard deviation of returns on common stocks? Note: Enter your answer as a percent rounded to 1 decimal place.
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
Which one of the following is a correct ranking of securities based on their volatility over a very long-term period? Rank from highest to lowest. - large company stocks, U.S. Treasury bills, long-term government bonds - small company stocks, long-term corporate bonds, large company stocks - small company stocks, long-term corporate bonds, intermediate-term government bonds - large company stocks, small company stocks, long-term government bonds - intermediate-term government bonds, long-term corporate bonds, U.S. Treasury bills
Rank the following from highest average historical standard devlation to lowest average historical standard devlation from 1926 to 2017 I Small stocks IL Long-term bonds IL Large stocks IV T-bills Multipie Cholce LIL IV L . IV LIV.
Assume these are the stock market and Treasury bill returns for a 5-year period: T-Bill Return Year Stock Market Return (8) (8) 2016 32.50 0.07 2017 11.80 0.07 2018 -2.40 0.07 2019 13.70 0.25 2020 22.40 0.27 Required: a. What was the risk premium on common stock in each year? b. What was the average risk premium? c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) Complete this question by entering your answers in the tabs below. Required A Required B Required C What was the risk premium on common stock in each year? Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Negative values should be entered with a negative sign.. Year Risk Premium 2016 % 2017 % 2018 % 2019 % 2020 %
Rank the following from highest average historical return to lowest average historical return from 1926-2006. Small stocks Long term bonds Large stocks T-bills Group of answer choices 1, 2, 3, 4 3, 4, 2, 1 1, 3, 2, 4 3, 1, 2, 4 4, 2, 3, 1
Consider the following table for different assets for 1926 through 2020. Standard Deviation 19.7% Series Large-company stocks Small-company stocks Long-term corporate bonds Long-term government bonds Intermediate-term government bonds U.S. Treasury bills Inflation Average return 12.2% 16.2 6.5 6.1 5.3 3.3 2.9 Expected range of returns Expected range of returns a. What range of returns would you expect to see 68 percent of the time for large-company stocks? Note: A negative answer should be indicated by a minus sign. Enter your answers from lowest to highest. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. b. What about 95 percent of the time? 31.3 8.5 9.8 Note: A negative answer should be indicated by a minus sign. Enter your answers from lowest to highest. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. % to % to 5.6 3.1 4.0 % %
Questions 6 The performance (%) of one stock and one bond over the past four years is as follows: Return Return Return in 2018 Return in 2019 Return in 2020 Average standard in 2017 return deviation Stock Bond 20 -30 25 15 25.33 1 3 3.75 ? a) What is the average return of the stock? b) What is the standard deviation of the bond? c) What are the two lessons from the capital market history?
Over the period of 1926-2014, which one of the following investment classes had the highest volatility of returns? Multiple Choice Large-company stocks U.S. Treasury bills Small-company stocks Long-term corporate bonds Long-term government bonds
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) T-Bill Return (%) 2016 13.0 0.2 2017 21.0 0.8 2018 -6.2 1.8 2019 29.8 2.1 2020 20.6 0.4 Required: What was the risk premium on common stock in each year? What was the average risk premium? What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)