Description

Market Return Data

Instructions

For questions 1 through 10, refer to the following historical market return data:

The following data are the returns for 1980 through 1986 on five types of capital-market instruments: common stocks, small-capitilzation stocks, long-term corporate bonds, long-term U.S. government bonds, and U.S. Treasury Bills. You may wish to use a spreadsheet program to make your calculations.

Year	Common Stock	Small Stocks	Long-term Corporate Bonds	Long-term Government Bonds	U.S. Treasury Bills
1980	0.3242	0.3988	-0.0262	-0.0395	0.1124
1981	-0.0491	0.1388	-0.0096	0.0185	0.1471
1982	0.2141	0.2801	0.4379	0.4035	0.1054
1983	0.2251	0.3967	0.0470	0.0068	0.0880
1984	0.0627	-0.0667	0.1639	0.1543	0.0985
1985	0.3216	0.2466	0.3090	0.3097	0.0772
1986	0.1847	0.0685	0.1985	0.2444	0.0616

For the average return problems, enter your answers in percentage format (e.g. enter 12.5% as 12.50 rather than .125)

For the holding period return problems, enter your answers as percentage values; in other words, convert your decimal format of holding period return to percentage return format (e.g. a formula result of 2.25 should be converted to 225%)

For the expected return problems, enter your answers as percentage values (e.g. enter 7.50% as 7.50 and not as 0.075)

Questions

1 -What was the average return during the period for all Common Stocks?

2-Calculate the average return for Small Company Stocks.

3-What was the average return during the period for Long Term Corporate Bonds?

4- What was the average return during the period for Long Term Government Bonds?

5-What was the average return during the period for US Treasury Bills?

6-Calculate the holding period return for common stocks for the 7-year holding period of 1980 through 1986

. 7-Calculate the holding period return for Long Term Corporate Bonds for the 7-year holding period of 1980 through 1986.

8-Calculate the holding period return for US Treasury Bills for the 7-year holding period of 1980 through 1986

9-Using the Average US Treasury Bill Rate as a proxy for the risk-free rate, what was the average risk premium for Small Company Common Stocks for the 7-year period?

10-Using the Average US Treasury Bill Rate as a proxy for the risk-free rate, what was the average risk premium for Long Term Corporate Bonds for the 7-year period?