Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Assume these were the inflation rates and U.S. stock market and Treasury bill returns between 1929 and 1933:
| Year | Inflation(%) | Stock Market Return(%) | T-Bill Return(%) |
| 1929 | 0.4 | –14.6 | 4.8 |
| 1930 | –3.9 | –27.1 | 2.9 |
| 1931 | –8.2 | –49.8 | 1.4 |
| 1932 | –10.8 | –6.4 | 0.9 |
| 1933 | 1.0 | 63.8 | 0.5 |
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What was the real return on the stock market in each year?
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What was the average real return?
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What was the risk premium in each year?
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What was the average risk premium?
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