Adequate information: To compute: Average return on large company stock and T-bills Introduction: Average return is defined as the average of all the returns earned during a period. It can be computed by dividing all the returns in different years by the number of years.

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Answer 1

Question

Chapter 10, Problem 8QAP

A

Summary Introduction

Adequate information:

To compute: Average return on large company stock and T-bills

Introduction: Average return is defined as the average of all the returns earned during a period. It can be computed by dividing all the returns in different years by the number of years.

B

Summary Introduction

Adequate information:

Years Large company stock returns (%) T-bills returns (%)
1973 -14.69 7.29
1974 -26.47 7.99
1975 37.23 5.87
1976 23.93 5.07
1977 -7.16 5.45
1978 6.57 7.64
Total 19.41 39.31
Average return 3.24 6.55

To compute: The standard deviation for the returns.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

C

Summary Introduction

Adequate information:

Years Large company stock returns (%)(A) T-bills returns (%)(B) Risk premium (A-B)
1973 -14.69 7.29 -21.98
1974 -26.47 7.99 -34.46
1975 37.23 5.87 31.36
1976 23.93 5.07 18.86
1977 -7.16 5.45 -12.61
1978 6.57 7.64 -1.07
Total 19.41 39.31 -19.90

To compute: The average return and standard deviation.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

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Assume these are the stock market and Treasury bill returns for a 5-year period: 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. 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.

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

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

Answer 2

Question

Chapter 10, Problem 8QAP

A

Summary Introduction

Adequate information:

To compute: Average return on large company stock and T-bills

Introduction: Average return is defined as the average of all the returns earned during a period. It can be computed by dividing all the returns in different years by the number of years.

B

Summary Introduction

Adequate information:

Years Large company stock returns (%) T-bills returns (%)
1973 -14.69 7.29
1974 -26.47 7.99
1975 37.23 5.87
1976 23.93 5.07
1977 -7.16 5.45
1978 6.57 7.64
Total 19.41 39.31
Average return 3.24 6.55

To compute: The standard deviation for the returns.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

C

Summary Introduction

Adequate information:

Years Large company stock returns (%)(A) T-bills returns (%)(B) Risk premium (A-B)
1973 -14.69 7.29 -21.98
1974 -26.47 7.99 -34.46
1975 37.23 5.87 31.36
1976 23.93 5.07 18.86
1977 -7.16 5.45 -12.61
1978 6.57 7.64 -1.07
Total 19.41 39.31 -19.90

To compute: The average return and standard deviation.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 10, Problem 8QAP

A

Summary Introduction

Adequate information:

To compute: Average return on large company stock and T-bills

Introduction: Average return is defined as the average of all the returns earned during a period. It can be computed by dividing all the returns in different years by the number of years.

B

Summary Introduction

Adequate information:

Years Large company stock returns (%) T-bills returns (%)
1973 -14.69 7.29
1974 -26.47 7.99
1975 37.23 5.87
1976 23.93 5.07
1977 -7.16 5.45
1978 6.57 7.64
Total 19.41 39.31
Average return 3.24 6.55

To compute: The standard deviation for the returns.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

C

Summary Introduction

Adequate information:

Years Large company stock returns (%)(A) T-bills returns (%)(B) Risk premium (A-B)
1973 -14.69 7.29 -21.98
1974 -26.47 7.99 -34.46
1975 37.23 5.87 31.36
1976 23.93 5.07 18.86
1977 -7.16 5.45 -12.61
1978 6.57 7.64 -1.07
Total 19.41 39.31 -19.90

To compute: The average return and standard deviation.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 10, Problem 8QAP

A

Summary Introduction

Adequate information:

To compute: Average return on large company stock and T-bills

Introduction: Average return is defined as the average of all the returns earned during a period. It can be computed by dividing all the returns in different years by the number of years.

B

Summary Introduction

Adequate information:

Years Large company stock returns (%) T-bills returns (%)
1973 -14.69 7.29
1974 -26.47 7.99
1975 37.23 5.87
1976 23.93 5.07
1977 -7.16 5.45
1978 6.57 7.64
Total 19.41 39.31
Average return 3.24 6.55

To compute: The standard deviation for the returns.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

C

Summary Introduction

Adequate information:

Years Large company stock returns (%)(A) T-bills returns (%)(B) Risk premium (A-B)
1973 -14.69 7.29 -21.98
1974 -26.47 7.99 -34.46
1975 37.23 5.87 31.36
1976 23.93 5.07 18.86
1977 -7.16 5.45 -12.61
1978 6.57 7.64 -1.07
Total 19.41 39.31 -19.90

To compute: The average return and standard deviation.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 10, Problem 8QAP

A

Summary Introduction

Adequate information:

To compute: Average return on large company stock and T-bills

Introduction: Average return is defined as the average of all the returns earned during a period. It can be computed by dividing all the returns in different years by the number of years.

B

Summary Introduction

Adequate information:

Years Large company stock returns (%) T-bills returns (%)
1973 -14.69 7.29
1974 -26.47 7.99
1975 37.23 5.87
1976 23.93 5.07
1977 -7.16 5.45
1978 6.57 7.64
Total 19.41 39.31
Average return 3.24 6.55

To compute: The standard deviation for the returns.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

C

Summary Introduction

Adequate information:

Years Large company stock returns (%)(A) T-bills returns (%)(B) Risk premium (A-B)
1973 -14.69 7.29 -21.98
1974 -26.47 7.99 -34.46
1975 37.23 5.87 31.36
1976 23.93 5.07 18.86
1977 -7.16 5.45 -12.61
1978 6.57 7.64 -1.07
Total 19.41 39.31 -19.90

To compute: The average return and standard deviation.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

Answer 6

Chapter 10, Problem 8QAP

A

Summary Introduction

Adequate information:

To compute: Average return on large company stock and T-bills

Introduction: Average return is defined as the average of all the returns earned during a period. It can be computed by dividing all the returns in different years by the number of years.

Answer 7

Chapter 10, Problem 8QAP

A

Summary Introduction

Adequate information:

To compute: Average return on large company stock and T-bills

Introduction: Average return is defined as the average of all the returns earned during a period. It can be computed by dividing all the returns in different years by the number of years.

Answer 8

B

Summary Introduction

Adequate information:

Years Large company stock returns (%) T-bills returns (%)
1973 -14.69 7.29
1974 -26.47 7.99
1975 37.23 5.87
1976 23.93 5.07
1977 -7.16 5.45
1978 6.57 7.64
Total 19.41 39.31
Average return 3.24 6.55

To compute: The standard deviation for the returns.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

Answer 9

B

Summary Introduction

Adequate information:

Years Large company stock returns (%) T-bills returns (%)
1973 -14.69 7.29
1974 -26.47 7.99
1975 37.23 5.87
1976 23.93 5.07
1977 -7.16 5.45
1978 6.57 7.64
Total 19.41 39.31
Average return 3.24 6.55

To compute: The standard deviation for the returns.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

Answer 10

C

Summary Introduction

Adequate information:

Years Large company stock returns (%)(A) T-bills returns (%)(B) Risk premium (A-B)
1973 -14.69 7.29 -21.98
1974 -26.47 7.99 -34.46
1975 37.23 5.87 31.36
1976 23.93 5.07 18.86
1977 -7.16 5.45 -12.61
1978 6.57 7.64 -1.07
Total 19.41 39.31 -19.90

To compute: The average return and standard deviation.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

Answer 11

C

Summary Introduction

Adequate information:

Years Large company stock returns (%)(A) T-bills returns (%)(B) Risk premium (A-B)
1973 -14.69 7.29 -21.98
1974 -26.47 7.99 -34.46
1975 37.23 5.87 31.36
1976 23.93 5.07 18.86
1977 -7.16 5.45 -12.61
1978 6.57 7.64 -1.07
Total 19.41 39.31 -19.90

To compute: The average return and standard deviation.

Introduction: The standard deviation is defined as the statistical calculation to derive the square root of the variance of the data provided.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 10 - Investment Selection Given that Madrigal...Ch. 10 - Investment Selection Given that Sears was down by...Ch. 10 - Risk and Return We have seen that over long...Ch. 10 - Prob. 4CQ Ch. 10 - Effects of Inflation Look at Table 10.1 and Figure...Ch. 10 - Risk Premiums Is it possible for the risk premium...Ch. 10 - Prob. 7CQ Ch. 10 - Returns Two years ago, the Lake Minerals and Small...Ch. 10 - Prob. 9CQ Ch. 10 - Historical Returns The historical asset class...

Adequate information: To compute: Average return on large company stock and T-bills Introduction: Average return is defined as the average of all the returns earned during a period. It can be computed by dividing all the returns in different years by the number of years.

Solution Summary: The author explains how to compute the average return on large company stock and T-bills by dividing all the returns in different years by the number of years.

Adequate information:

To compute: Average return on large company stock and T-bills

Introduction: Average return is defined as the average of all the returns earned during a period. It can be computed by dividing all the returns in different years by the number of years.

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Chapter 10 Solutions

Years	Large company stock returns (%)	T-bills returns (%)
1973	-14.69	7.29
1974	-26.47	7.99
1975	37.23	5.87
1976	23.93	5.07
1977	-7.16	5.45
1978	6.57	7.64
Total	19.41	39.31
Average return	3.24	6.55

Years	Large company stock returns (%)(A)	T-bills returns (%)(B)	Risk premium (A-B)
1973	-14.69	7.29	-21.98
1974	-26.47	7.99	-34.46
1975	37.23	5.87	31.36
1976	23.93	5.07	18.86
1977	-7.16	5.45	-12.61
1978	6.57	7.64	-1.07
Total	19.41	39.31	-19.90