Table 12.1 (below)
Year | Large-Company Stocks | Long-Term Government Bonds | U.S. Treasury Bills | Consumer Price Index |
---|---|---|---|---|
1926 | 11.62% | 7.77% | 3.27% | –1.49% |
1927 | 37.49 | 8.93 | 3.12 | –2.08 |
1928 | 43.61 | .10 | 3.56 | –.97 |
1929 | –8.42 | 3.42 | 4.75 | .20 |
1930 | –24.90 | 4.66 | 2.41 | –6.03 |
1931 | –43.34 | –5.31 | 1.07 | –9.52 |
1932 | –8.19 | 16.84 | .96 | –10.30 |
1933 | 53.99 | –.07 | .30 | .51 |
1934 | –1.44 | 10.03 | .16 | 2.03 |
1935 | 47.67 | 4.98 | .17 | 2.99 |
1936 | 33.92 | 7.52 | .18 | 1.21 |
1937 | –35.03 | .23 | .31 | 3.10 |
1938 | 31.12 | 5.53 | –.02 | –2.78 |
1939 | –.41 | 5.94 | .02 | –.48 |
1940 | –9.78 | 6.09 | .00 | .96 |
1941 | –11.59 | .93 | .06 | 9.72 |
1942 | 20.34 | 3.22 | .27 | 9.29 |
1943 | 25.90 | 2.08 | .35 | 3.16 |
1944 | 19.75 | 2.81 | .33 | 2.11 |
1945 | 36.44 | 10.73 | .33 | 2.25 |
1946 | –8.07 | –.10 | .35 | 18.16 |
1947 | 5.71 | –2.62 | .50 | 9.01 |
1948 | 5.50 | 3.40 | .81 | 2.71 |
1949 | 18.79 | 6.45 | 1.10 | –1.80 |
1950 | 31.71 | .06 | 1.20 | 5.79 |
1951 | 24.02 | –3.93 | 1.49 | 5.87 |
1952 | 18.37 | 1.16 | 1.66 | .88 |
1953 | –.99 | 3.64 | 1.82 | .62 |
1954 | 52.62 | 7.19 | .86 | –.50 |
1955 | 31.56 | –1.29 | 1.57 | .37 |
1956 | 6.56 | –5.59 | 2.46 | 2.86 |
1957 | –10.78 | 7.46 | 3.14 | 3.02 |
1958 | 43.36 | –6.09 | 1.54 | 1.76 |
1959 | 11.96 | –2.26 | 2.95 | 1.50 |
1960 | .47 | 13.78 | 2.66 | 1.48 |
1961 | 26.89 | .97 | 2.13 | .67 |
1962 | –8.73 | 6.89 | 2.73 | 1.22 |
1963 | 22.80 | 1.21 | 3.12 | 1.65 |
1964 | 16.48 | 3.51 | 3.54 | 1.19 |
1965 | 12.45 | .71 | 3.93 | 1.92 |
1966 | –10.06 | 3.65 | 4.76 | 3.35 |
1967 | 23.98 | –9.18 | 4.21 | 3.04 |
1968 | 11.06 | –.26 | 5.21 | 4.72 |
1969 | –8.50 | –5.07 | 6.58 | 6.11 |
1970 | 3.86 | 12.11 | 6.52 | 5.49 |
1971 | 14.30 | 13.23 | 4.39 | 3.36 |
1972 | 19.00 | 5.69 | 3.84 | 3.41 |
1973 | –14.69 | –1.11 | 6.93 | 8.80 |
1974 | –26.47 | 4.35 | 8.00 | 12.20 |
1975 | 37.23 | 9.20 | 5.80 | 7.01 |
1976 | 23.93 | 16.75 | 5.08 | 4.81 |
1977 | –7.16 | –.69 | 5.12 | 6.77 |
1978 | 6.57 | –1.18 | 7.18 | 9.03 |
1979 | 18.61 | –1.23 | 10.38 | 13.31 |
1980 | 32.50 | –3.95 | 11.24 | 12.40 |
1981 | –4.92 | 1.86 | 14.71 | 8.94 |
1982 | 21.55 | 40.36 | 10.54 | 3.87 |
1983 | 22.56 | .65 | 8.80 | 3.80 |
1984 | 6.27 | 15.48 | 9.85 | 3.95 |
1985 | 31.73 | 30.97 | 7.72 | 3.77 |
1986 | 18.67 | 24.53 | 6.16 | 1.13 |
1987 | 5.25 | –2.71 | 5.47 | 4.41 |
1988 | 16.61 | 9.67 | 6.35 | 4.42 |
1989 | 31.69 | 18.11 | 8.37 | 4.65 |
1990 | –3.10 | 6.18 | 7.81 | 6.11 |
1991 | 30.47 | 19.30 | 5.60 | 3.06 |
1992 | 7.62 | 8.05 | 3.51 | 2.90 |
1993 | 10.08 | 18.24 | 2.90 | 2.75 |
1994 | 1.32 | –7.77 | 3.90 | 2.67 |
1995 | 37.58 | 31.67 | 5.60 | 2.54 |
1996 | 22.96 | –.93 | 5.21 | 3.32 |
1997 | 33.36 | 15.85 | 5.26 | 1.70 |
1998 | 28.58 | 13.06 | 4.86 | 1.61 |
1999 | 21.04 | –8.96 | 4.68 | 2.68 |
2000 | –9.10 | 21.48 | 5.89 | 3.39 |
2001 | –11.89 | 3.70 | 3.83 | 1.55 |
2002 | –22.10 | 17.84 | 1.65 | 2.38 |
2003 | 28.68 | 1.45 | 1.02 | 1.88 |
2004 | 10.88 | 8.51 | 1.20 | 3.26 |
2005 | 4.91 | 7.81 | 2.98 | 3.42 |
2006 | 15.79 | 1.19 | 4.80 | 2.54 |
2007 | 5.49 | 9.88 | 4.66 | 4.08 |
2008 | –37.00 | 25.87 | 1.60 | .09 |
2009 | 26.46 | –14.90 | .10 | 2.72 |
2010 | 15.06 | 10.14 | .12 | 1.50 |
2011 | 2.11 | 27.10 | .04 | 2.96 |
2012 | 16.00 | 3.43 | .06 | 1.74 |
2013 | 32.39 | –12.78 | .02 | 1.51 |
2014 | 13.69 | 24.71 | .02 | .76 |
2015 | 1.38 | –.65 | .02 | .73 |
2016 | 11.96 | 1.75 | .20 | 2.07 |
2017 | 21.83 | 6.24 | .80 | 2.11 |
2018 | –4.38 | –.57 | 1.81 | 1.91 |
2019 | 31.49 | 12.16 | 2.14 | 2.29 |
a. | Calculate the arithmetic average returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
b. | Calculate the standard deviation of the returns for large-company stocks and T-bills over this period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
c-1. | Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the average risk premium over this period? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
c-2. | Calculate the observed risk premium in each year for the large-company stocks versus the T-bills. What was the standard deviation of the risk premium over this period? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
Answers: What are "?"
a. | Large-company stocks | 5.55 | % |
a. | T-bills | ? | % |
b. | Large-company stocks | 23.23 | % |
b. | T-bills | ? | % |
c-1 | Average risk premium | 0.49 | % |
c-2 | Standard deviation | 24.40 | % |
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