Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Download the data from the following data table Yearly returns from 1929-1940 for the S&P 500, small stocks, corporate bonds, world portfolio, Treasury bills, and

Download the data from the following data table

Yearly returns from 1929-1940 for the S&P 500, small stocks, corporate bonds, world portfolio,

Treasury bills, and inflation (as measured by the CPI).

Year

S&P 500

Small Stocks

Corp Bonds

World Portfolio

Treasury Bills

CPI

1929

0.08906

0.43081

0.04320

0.07692

0.04471

0.00585

1930

0.25256

0.44698

0.06343

0.22574

0.02266

0.06395

1931

0.43861

0.54676

0.02380

0.39305

0.01153

0.09317

1932

0.08854

0.00471

0.12199

0.03030

0.00882

0.10274

1933

0.52880

2.16138

0.05255

0.66449

0.00516

0.00763

1934

- 0.02341

0.57195

0.09728

0.02552

0.00265

0.01515

1935

0.47221

0.69112

0.06860

0.22782

0.00171

0.02985

1936

0.32796

0.70023

0.06219

0.19283

0.00173

0.01449

1937

0.35258

0.56131

0.02546

0.16950

0.00267

0.02857

1938

0.33204

0.08928

0.04357

0.05614

0.00060

0.02778

1939

0.00914

0.04327

0.04247

0.01441

0.00042

0.00000

1940

0.10078

0.28063

0.04512

0.03528

0.00037

0.00714

a. Compute the average return for each of the assets from 1929 to 1940 (the Great Depression).

b. Compute the variance and standard deviation for each of the assets from 1929 to 1940.

c. Which asset was riskiest during the Great Depression? How does that fit with your intuition?

a. Compute the average return for each of the assets from 1929 to 1940 (the Great Depression).

The average return for the S&P 500 was _______. (Round to five decimal places.)

The average return for the Small Stocks was _______. (Round to five decimal places.)

The average return for the Corp Bonds was ______. (Round to five decimal places.)

The average return for the World Portfolio was _______. (Round to five decimal places.)

The average return for the Treasury Bills was ______. (Round to five decimal places.)

The average for the CPI was ______. (Round to five decimal places.)

b. Compute the variance and standard deviation for each of the assets from 1929 to 1940.

The variance for the S&P 500 was _______. (Round to five decimal places.)

The variance for the Small Stocks was _______. (Round to five decimal places.)

The variance for the Corp Bonds was _______. (Round to five decimal places.)

The variance for the World Portfolio was _______. (Round to five decimal places.)

The variance for the Treasury Bills was ______. (Round to five decimal places.)

The variance for the CPI was _______. (Round to five decimal places.)

The standard deviation for the S&P 500 was _______. (Round to five decimal places.)

The standard deviation for the Small Stocks was _______. (Round to five decimal places.)

The standard deviation for the Corp Bonds was _______. (Round to five decimal places.)

The standard deviation for the World Portfolio was _______. (Round to five decimal places.)

The standard deviation for the Treasury Bills was _______. (Round to five decimal places.)

The standard deviation for the CPI was ______. (Round to five decimal places.)

c. Which asset was riskiest during the Great Depression? How does that fit with your intuition? (Select the best choice below.)

A. The riskiest assets were the Treasury Bills. Intuition tells us that government securities would be the riskiest.

B. The riskiest assets were the small stocks. Intuition tells us that smaller companies should be riskiest.

C. The riskiest assets were the stocks in the S&P 500. Intuition tells us that large companies should be the riskiest.

D. The riskiest assets were the corporate bonds. Intuition tells us that company debt should be riskiest.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions