Using information from Table 10.2 in Chapter 10 about capital market history, determine the return on a
Question:
Table 10.2
PortfolioA portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
Average Annual Returns, 1957 to 2013 Arithmetic average return (%) 10.43 Standard premium deviation Risk Investment Distribution 4.46 16.64 stocks --30-25-20-15-10-5 0 5 10 15 20 25 30 3 0 45 US common 11.64 5.67 10 SCAN) 30-25-20-15-10-505 0 15 20 25 30 35 40 45 Arithmetic average return (%) 8.38 Risk premium deviation Distribution Investment Long bonds 2.41 9.81 16 14 12 0 -20-15-10-5 0 ฐ 10 15 20 25 30 35 40 45 50 Small stocks14.16 8.19 26.25 90-45 AD 15-30 25 2 15-10-50 5 1015 20 25 30 35 0 45 50 55
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Corporate Finance
ISBN: 978-0071339575
7th Canadian Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Ro
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Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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