FINANCE 100

Chapter 12, page 343, P6

Find the real return on the following investments.                    

Stock A- 10%-?%=?%

Stock B- 15%-?%=?%

Stock C- 5%-?%=?%

Chapter 12, page 343, P8

8. The countries of Stabilato and Variato have the following average returns and standard deviations for their stocks, bond, and short-term government securities. What range of returns should you expect to earn 95 percent of the time for each asset class if you invested in Stabilato’s securities? From investing in Variato’s securities?

VARIATO                             AVERAGE                           STANDARD   95% range

ASSET                                   RETURN                            DEVIATION     (average +1/-2)

Stocks                                     15%                                           13%                 41              -11

Bonds                                      10%                                            8%                 ?                    ?

Short- term government debt   6%                                             3%                 ?                    ?