Question
Use the data in the tables below to answer the following questions: Average rates of return on Treasury bills, government bonds, and common stocks, 19002015.
Use the data in the tables below to answer the following questions:
Average rates of return on Treasury bills, government bonds, and common stocks, 19002015.
| Portfolio | Average Annual Rate of Return (%) | Average Premium (Extra return versus Treasury bills) (%) | ||||
| Treasury bills | 3.8 | |||||
| Treasury bonds | 5.3 | 1.5 | ||||
| Common stocks | 11.4 | 7.6 | ||||
| Standard deviation of returns, 19002015. PortfolioStandard Deviation (%)Treasury bills 2.9 Long-term government bonds 9.0 Common stocks 19.9 a. What was the average rate of return on large U.S. common stocks from 1900 to 2015? (Enter your answer as a percent rounded to 1 decimal place.) b. What was the average risk premium on common stocks? (Enter your answer as a percent rounded to 1 decimal place.) c. What was the standard deviation of returns on common stocks? (Enter your answer as a percent rounded to 1 decimal place.) | ||||||
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