What if the last two and a half decades had been “normal”? Download the spreadsheet from MyLab Finance containing the data for Figure 10.1.

a. Calculate the arithmetic average return on the S&P 500 from 1926 to 1989.

b. Assuming that the S&P 500 had simply continued to earn the average return from

(a), calculate the amount that $100 invested at the end of 1925 would have grown to by the end of 2017.

c. Do the same for small stocks.

Common Versus Independent Risk AppendixLO1