Use the data in the tables below to answer the following questions: Average rate

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, 1900–2013.

Standard deviation of returns, 1900–2013.

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.)

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.)

Use the data in the tables below to answer the following questions:

Average rates of return on Treasury bills, government bonds, and common stocks, 1900–2013.

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, 1900–2013.

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 ___________%

Explanation / Answer

Average return = 11.5%

Average risk premium = 7.6%

Std dev on common stock = 19.9%

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