Average Annual Rates Standard Deviation T-Bills Inflation Real T-Bill T-Bills Inflation Full sample 3.38 2.05 0.46 3.12 4.00 1927-1951 1952-2021 0.95 1.79 -0.47 1.24 6.04 4.26 3.46 0.81 3.13 2.89 (1927-2021) Mean excess return (annualized) Standard deviation (annualized) Market Index 8.29 18.52 Big/ Big/ Small/ Small/ Growth Value Growth Value 8.07 18.35 11.69 8.99 15.38 24.70 26.06 28,21 Real T-Bill 3.76 6.33 2.12 Suppose that the inflation rate is expected to be 2.05% in the near future using the historical data provided in Table 5.3 and Table what would be your predictions for the following? Note: Round your answers to 2 decimal places. a. The T-bill rate? b. The expected rate of return on the Big/Value portfolio? c. The risk premium on the stock market? % %

Average Annual Rates Standard Deviation T-Bills Inflation Real T-Bill T-Bills Inflation Full sample 3.38 2.05 0.46 3.12 4.00 1927-1951 1952-2021 0.95 1.79 -0.47 1.24 6.04 4.26 3.46 0.81 3.13 2.89 (1927-2021) Mean excess return (annualized) Standard deviation (annualized) Market Index 8.29 18.52 Big/ Big/ Small/ Small/ Growth Value Growth Value 8.07 18.35 11.69 8.99 15.38 24.70 26.06 28,21 Real T-Bill 3.76 6.33 2.12 Suppose that the inflation rate is expected to be 2.05% in the near future using the historical data provided in Table 5.3 and Table what would be your predictions for the following? Note: Round your answers to 2 decimal places. a. The T-bill rate? b. The expected rate of return on the Big/Value portfolio? c. The risk premium on the stock market? % %

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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