Question
Assume these were the inflation rates and U.S. stock market and Treasury bill returns between 1929 and 1933: Year Inflation(%) Stock Market Return(%) T-Bill Return(%)
Assume these were the inflation rates and U.S. stock market and Treasury bill returns between 1929 and 1933:
| Year | Inflation(%) | Stock Market Return(%) | T-Bill Return(%) |
|---|---|---|---|
| 1929 | 0.5 | 15.7 | 4.7 |
| 1930 | 6.0 | 26.8 | 2.9 |
| 1931 | 8.9 | 43.6 | 1.8 |
| 1932 | 12.3 | 10.7 | 0.9 |
| 1933 | 1.1 | 56.3 | 0.5 |
What was the real return on the stock market in each year?
What was the average real return?
What was the risk premium in each year?
What was the average risk premium?
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Managerial Finance Essentials
Authors: Charles O. Kroncke, Alan E. Grunewald, Erwin Esser Nemmers
2nd Edition
0829901590, 978-0829901597
