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Use the data in the tables below to answer the following questions: Average rates of return on Treasury bills, government bonds, and common stocks, 19002013.
Use the data in the tables below to answer the following questions: |
Average rates of return on Treasury bills, government bonds, and common stocks, 19002013. |
Portfolio | Average Annual Rate of Return | Average Premium (Extra return versus Treasury bills) | |||
Treasury bills | 3.9 | ||||
Treasury bonds | 5.2 | 1.3 | |||
Common stocks | 11.5 | 7.6 | |||
Standard deviation of returns, 19002013. |
Portfolio | Standard Deviation, % | ||
Treasury bills | 2.8 | ||
Long-term government bonds | 8.9 | ||
Common stocks | 19.9 | ||
a. | What was the average rate of return on large U.S. common stocks from 1900 to 2013? (Enter your answer as a percent rounded to 1 decimal place.) |
Average rate of return | % |
b. | What was the average risk premium on common stocks? (Enter your answer as a percent rounded to 1 decimal place.) |
Average risk premium | % |
c. | What was the standard deviation of returns on common stocks? (Enter your answer as a percent rounded to 1 decimal place.) |
Standard deviation of returns |
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