Notice in Figure that 1981 was the top year for nominal bill returns and 1982 was the
Question:
Transcribed Image Text:
Return (%) The dots in the figure show the return on each asset class irn every yearfrom 1900-2006. Notice that common stock returns cover a wider range than returns on Treasury bonds or bills. But common stocks also earn the highest average returns 60.0% -1933 50.0% -1982 40.0% 30.0% Source: Triumph of the Optimists, by Elroy Dimson, Paul Marsh, and Mike Staunton, in Global linvestment Returns Yearbook 2007 Published by ABN AMRO, London Updates provided by Dimson, et al. Reprinted with permission 20.0% Ave. Return 2006 -1981 -5.2701-2005 Ave. Return I-2006 -4.0% 1.280 1938 Ave. Return 10.0% -2005 0.0% 2006 -1967 -10.0% -20.0% 30.0% -40.0% -1931 50.0% Stocks Bonds Bills Type of Asset
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 93% (16 reviews)
The answer is that the inflation rate was quite high at this time Remember that the no...View the full answer
Answered By
Grace Igiamoh-Livingwater
I am a qualified statistics lecturer and researcher with an excellent interpersonal writing and communication skills. I have seven years tutoring and lecturing experience in statistics. I am an expert in the use of computer software tools and statistical packages like Microsoft Office Word, Advanced Excel, SQL, Power Point, SPSS, STATA and Epi-Info.
5.00+
1+ Reviews
10+ Question Solved
Related Book For
Introduction to Corporate Finance
ISBN: 978-0324657937
2nd edition
Authors: Scott B. Smart, William L Megginson
Question Posted:
Students also viewed these Corporate Finance questions
-
Why do you think Wilson was appointed Director?
-
Why do you think Wesable opted not to use Yodlee and build its own account aggregation services? Similarly, why do you think Mint.com jumped at the chance to partner with Yodlee?
-
Why do you think that some human resource managers might be reluctant to use information technology such as an HRIS? Do you think that the trend toward the use of Web 2.0 technologies and SaaS can...
-
In the United States, the production of ethanol fuel from corn is subsidized. Use bid rent function analysis to suggest what effects this subsidy might be expected to have on land use.
-
Discuss the three generations of DBMSs.
-
Alanood Company wants to prepare interim financial statements for the first quarte of 2020 but would like to avoid making a phusical count of inventory.During the last five years the compan's gross...
-
Distinguish between the finance charge and the annual percentage rate.
-
What two important management principles affect the successful operation of a growing organization? Do you think John Moodys difficulties could have been avoided if he understood these principles?...
-
Machinery was purchased on 2anuary 1 for $66,000,00. The machinery has an estimated life of 7 years and an estimated salvage value of $9,000. Double declining balance depreclation for the second year...
-
To keep up with current trends and demands, a supermarket has to mix its merchandising sources. Suggest five product lines from each of the following categories. a. Company-owned. b. Outside,...
-
Look at Table. Compare the best and worst years for Tbills in terms of their nominal returns, and then compare the best and worst years in terms of real returns. Comment on what you find. Nominal (%)...
-
Refer again to Figure. At the stock market peak in 1929, look at the gap that exists between equities and bonds. At the end of 1929, the $1 investment in stocks was worth about five times more than...
-
TOR most recently sold 100,000 units at $7.50 each; its variable operating costs are $3.00 per unit, and its fixed operating costs are $250,000. Annual interest charges total $80,000, and the firm...
-
Implement the nearest neighbor algorithm in the programming language of your choice. The algorithm should work with vectors of up to 10 integer values and allow up to 10 integer classifications. By...
-
Use the operators described in Section 16.2.4 and the STRIPS method to solve the block world planning problem shown in Figure 16.11. The first state shown is the start state and the second state is...
-
Implement a Bayesian belief network in the programming language of your choice to represent a subject in which you are interested (for example, you might use it to diagnose medical conditions from...
-
Researchers have measured the acceleration of racing greyhounds as a function of their speed; a simplified version of their results is shown in Figure P4.67. The acceleration at low speeds is...
-
If the rate at which energy is dissipated by resistor 1 in Figure P31.86 is \(2.5 \mathrm{~W}\), and \(R_{1}=10 \Omega, \mathscr{E}_{1}=12 \mathrm{~V}\), and \(\mathscr{E}_{2}=6 \mathrm{~V},\) (a)...
-
Consider the MOSFET diff-amp with the configuration in Figure P11.33. The circuit parameters are \(V^{+}=3 \mathrm{~V}, V^{-}=-3 \mathrm{~V}\), and \(I_{Q}=0.2 \mathrm{~mA}\). The transistor...
-
Simplify the expression. Assume that all variables are positive. 23VI1 2 V44 8
-
In a single stage impulse turbine the blade angles are equal and the nozzle angle is \(20^{\circ}\). The velocity coefficient for the blade is 0.83. Find the mzximum blade efficiency possible. If the...
-
For the following decisions, indicate if they are consistent with risk aversion or risk loving. a. Buying a lottery ticket b. Buying fire insurance on your house c. Jaywalking on St. Catherine Street...
-
TrenStar Inc. has five clients with different risk and return preferences. The market portfolio has an expected return of 10 percent, with a standard deviation of 7 percent. The risk-free rate is 6...
-
A lawyer prosecuting a lawsuit against The Brokerage Company has hired you to conduct an investigation into the advice the company has been giving its clients. You observe that clients have invested...
-
Problem 12.6A (Algo) Liquidation of a partnership LO P5 Kendra, Cogley, and Mel share income and loss in a 3.21 ratio (in ratio form: Kendra, 3/6: Cogley, 2/6; and Mel, 1/6), The partners have...
-
Melody Property Limited owns a right to use land together with a building from 2000 to 2046, and the carrying amount of the property was $5 million with a revaluation surplus of $2 million at the end...
-
Famas Llamas has a weighted average cost of capital of 9.1 percent. The companys cost of equity is 12.6 percent, and its cost of debt is 7.2 percent. The tax rate is 25 percent. What is the companys...
Study smarter with the SolutionInn App