The Ibbotson-Sinquefield data show that Blank______. Multiple select question. long-term corporate bonds had less risk or variability than stocks U.S. T-bills had the lowest risk or variability inflation was always higher than the T-bill yield large common stocks had higher returns than small common stocks
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Which one of the following had the highest risk premium for the period 1926-2018? A. Small company bonds B. Large company stocks C. U.S. Treasury bills D. Small company stocks E. Large company bonds
Adi S.
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing annual percent return for Vanguard Total Stock Index (all stocks). Let y be a random variable representing annual return for Vanguard Balanced Index (60% stock and 40% bond). For the past several years, we have the following data. x: 20 0 28 34 18 35 14 -21 -18 -16 y: 22 -3 25 23 14 8 16 -8 -11 -8 (a) Compute Σx, Σx^2, Σy, Σy^2. Σx = 33 Σx^2 = 1,365 Σy = 48 Σy^2 = 1,365 (b) Use the results of part (a) to compute the sample mean, variance, and standard deviation for x and for y. (Round your answers to two decimal places.) x̄ = 3.30 s^2 = 464.40 s = 21.55 ȳ = 4.80 s^2 = 464.40 s = 21.55 (c) Compute a 75% Chebyshev interval around the mean for x values and also for y values. (Round your answers to two decimal places.) x: Lower Limit = -38.10, Upper Limit = 44.70 y: Lower Limit = -33.90, Upper Limit = 43.70 Use the intervals to compare the two funds. Multiple choice 75% of the returns for the balanced fund fall within a narrower range than those of the stock fund. 75% of the returns for the stock fund fall within a narrower range than those of the balanced fund. 25% of the returns for the balanced fund fall within a narrower range than those of the stock fund. 25% of the returns for the stock fund fall within a wider range than those of the balanced fund. (d) Compute the coefficient of variation for each fund. (Round your answers to the nearest whole number.) x: CV = 653% y: CV = 449% Use the coefficients of variation to compare the two funds. Multiple choice For each unit of return, the stock fund has lower risk. For each unit of return, the balanced fund has lower risk. For each unit of return, the funds have equal risk. If s represents risks and x represents expected return, then s/x can be thought of as a measure of risk per unit of expected return. In this case, why is a smaller CV better? Explain. Multiple choice A smaller CV is better because it indicates a higher risk per unit of expected return. A smaller CV is better because it indicates a lower risk per unit of expected return.
Lucas F.
Do bonds reduce the overall risk of an investment portfolio? Let x be a random variable representing the annual percent return for Vanguard Total Stock Index (all stocks). Let y be a random variable representing the annual return for Vanguard Balanced Index (60% stock and 40% bond). For the past several years, we have the following data: x: 14 0 38 19 21 18 22 -19 -19 -24 y: 22 -4 17 26 10 23 8 -9 -2 -9. (a) Compute Σx, Σx^2, Σy, Σy^2. Σx = 0, Σx^2 = 1236, Σy = 52, Σy^2 = 1098 (b) Use the results of part (a) to compute the sample mean, variance, and standard deviation for x and for y. (Round your answers to four decimal places.) x̄ = -0.4, s^2 = 404.24, s = 20.1051 ȳ = 5.2, s^2 = 146.96, s = 12.1244 (c) Compute a 75% Chebyshev interval around the mean for x values and also for y values. (Round your answers to two decimal places.) x: Lower Limit = -40.21, Upper Limit = 39.41 y: Lower Limit = -16.25, Upper Limit = 26.65 Use the intervals to compare the two funds. 75% of the returns for the balanced fund fall within a narrower range than those of the stock fund. 75% of the returns for the stock fund fall within a narrower range than those of the balanced fund. 25% of the returns for the balanced fund fall within a narrower range than those of the stock fund. 25% of the returns for the stock fund fall within a wider range than those of the balanced fund. (d) Compute the coefficient of variation for each fund. (Round your answers to the nearest whole number.) CVx = 5025% CVy = 233% Use the coefficients of variation to compare the two funds. For each unit of return, the stock fund has lower risk. For each unit of return, the balanced fund has lower risk. For each unit of return, the funds have equal risk. If s represents risks and x represents expected return, then s/x can be thought of as a measure of risk per unit of expected return. In this case, why is a smaller CV better? Explain. A smaller CV is better because it indicates a lower risk per unit of expected return.
David N.
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