Question
The chart below gives information for four classes of U.S. securities over the 10-year time period from 1900 - 1999. Order the securities from highest
The chart below gives information for four classes of U.S. securities over the 10-year time period from 1900 - 1999. Order the securities from highest average annual return to lowest for this time period. Now rank the securities from highest to lowest based on risk. Is the information consistent with what financial theory tells us? Why or why not?(Please show work for how you got the order)
(Class of Security) (Average Annual Return 1990 - 1999) (Standard Deviation)
Small Stocks 15.87% 29.04%
Large Stocks 18.99% 14.21%
Long-term Government Bonds 9.23% 9.49%
3-Month U.S. Treasury Bills 5.02% 2.98%
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