Question: 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.

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 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?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!