Question
Consider the following table for the total annual returns for a given period of time Large-company stocks : Average return 12.4% Standard deviation 20.7% Small-company
Consider the following table for the total annual returns for a given period of time
Large-company stocks : Average return 12.4% Standard deviation 20.7%
Small-company stocks: Average return 16.4% Standard deviation: 33.0%
Long-term corporate bonds: Average return 6.2% Standard deviation 8.4%
Long-Term government bonds: Average return 6.1% Standard deviation: 9.4%
Intermediate-term government bonds: Average return 5.6% Standard deviation: 5.7%
U.S. Treasury bills: Average return 3.8% Standard deviation 3.1%
Inflation: Average return 3.1% Standard deviation 4.2%
Requirement 1: What range of returns would you expect to see 95% of the time for large-company stocks?
Requirement 2: What about 99% of the time?
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