Question
1.Using historical risk premiums from Table 5.5 over the 19272018 period as your guide, what would be your estimate of the expected annual HPR on
1.Using historical risk premiums from Table 5.5 over the 19272018 period as your guide, what would be your estimate of the expected annual HPR on the Big/Value portfolio if the current risk-free interest rate is 1.70%? (Round your answer to 2 decimal places.)
2. The continuously compounded annual return on a stock is normally distributed with a mean of 24% and standard deviation of 31%. With 95.45% confidence, we should expect its actual return in any particular year to be between which pair of values? Hint: Refer to Figure 5.3.
multiple choice
38.0% and 86.0%
28.0% and 86.0%
24.7% and 72.7%
12.5% and 62.5%
Which is the answer?
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