If you could please help me with the following question, that would be much appreciated. Unfortunately, my professor doesn't explain anything, so if you can explain so I may know how to do it myself in the future, that would be much appreciated and I promise to give you a great review.

1) Please use the following data in the excel document to answer the question: https://docs.google.com/spreadsheets/d/1sf-VgFw_XnFS1jnjNlbf7y8ud4q9v5A7iCWs85EtLQA/edit?usp=sharing

a) Calculate the annualized return of a 60% equity / 40% bond portfolio in real terms for the entire history provided. What does your result suggest about the long-term return of a balanced portfolio?

b) Calculate the annual calendar year returns of a 60% equity / 40% bond portfolio in real terms and create a histogram of your annual results (use 5% buckets). What does this tell you about the journey associated with a balanced portfolio?

c) Create a bar chart of your annual results (in chronological order). What additional perspective do you gain about the journey an investor in a balanced portfolio experienced?

Tips: In case you need a reminder on how to calculate annualized returns: First you convert returns to return relative (e.g. 8% = 1.08 and -2% = 0.98), then geometrically link them (1.08 X 0.98 = 1.0584), then annualize by raising to the 1/n where n is the number of years or 1.0584^(1/2) = 1.0288, then subtract 1 and multiply by 100 (2.88%).

Two important nuances:

1) When you calculate the real return for each calendar year, you simply subtract inflation from the nominal return.

2) When you calculate the annualized real return you need to calculate the annualized nominal return and then the annualized inflation. You subtract the difference AFTER you get the annualized number for both. You cant geometrically link the individual real returns (just like you cant geometrically link manager excess returns you have to calculate annualized returns for both the manager and benchmark and then take the difference between the two).