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Average Return 14.3% 21.2% 9.7% 7.5% 5.6% Standard Deviation 21.1% 35.3% 10.4% 8.0% 5.2% Large-company stocks Long-term corporate bonds Long-term government bonds U.S. Treasury bills
Average Return 14.3% 21.2% 9.7% 7.5% 5.6% Standard Deviation 21.1% 35.3% 10.4% 8.0% 5.2% Large-company stocks Long-term corporate bonds Long-term government bonds U.S. Treasury bills During this 30-year period, what was the risk premium on large-company stocks? o 9.3% o 11.2% 7.8% o 8.7% 10.5% If you were to plot the distribution of returns for each of these investments, which investment would have thr tightest distribution? In other words, which investment would have the most observations near the average and the narrowest distributian curve? O Small-company stocks O U.S. Treasury bills O Long-term government bonds O Large-company stocks O Short-term govemment bonds Which investment exposes the investor to the greatest chance of negative returns in a given year? O Short-term govemment bonds O Large-company stocks O Long-term government bonds O Small-company stocks O U.S. Treasury bills what is the probability of observing a return on large-company stocks that is greater than 35.4%? Assume a normal distribution. About 16% About 68% About 32% About 34% About 95%
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