The following table shows the nominal returns on Brazilian stocks and the rate of inflation.Nominal Return (%)Inflation (%)Year20120.37.12013-13.07.22014-11.07.72015-42.712.0201667.57.620174.228.2a. What was the standard deviation of the market returns? (Use decimals, not percents, in your calculations. Do not roundintermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)Standard deviationb. Calculate the average real return. (A negative answer should be indicated by a minus sign. Do not round intermediatecalculations. Enter your answer as a percent rounded to 2 decimal places)Average real return

Excel spread sheet of calculation of standard deviation of the market returns:

Answered: The following table shows the nominal…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter13: Direct Foreign Investment

Section: Chapter Questions

Problem 1IEE

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The following table shows the nominal returns on Brazilian stocks and the rate of inflation. Year Nominal Return (%) Inflation (%) 2012 0.3 6.3 2013 -16.0 6.4 2014 -14.0 6.9 2015 -41.9 11.2 2016 66.7 6.8 2017 27.4 3.4 a. What was the standard deviation of the market returns? (Use decimals, not percents, in your calculations. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. Calculate the average real return. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places)
The following table shows the nominal returns on Brazilian stocks and the rate of inflation. Year Nominal Return (%) Inflation (%) 2012 0.3 7.1 2013 -13.0 7.2 2014 -11.0 7.7 2015 -42.7 12.0 2016 67.5 7.6 2017 28.2 4.2 Calculate the average real return. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places)
Suppose we have the following returns for large-company stocks and Treasury bills over a six-year period: Year Large-Company stocks US Treasury bills 1 3.95% 6.53% 2 14.13 4.38 3 19.07 4.25 4 −14.61 7.30 5 −32.10 4.94 6 37.32 6.14 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…
Assume these are the stock market and Treasury bill returns for a 5-year period in the attached image: A. What was the risk premium on common stock in each year? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) Risk Premium 2013 % 2014 % 2015 % 2016 % 2017 % b. What was the average risk premium? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.) (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Suppose that the Treasury bill rate is 9% rather than 6%, as we assumed in Table 12.1, and the expected return on the market is 11%. Use the betas in that table to answer the following questions. a. Recalculate the expected return on the stocks in Table 12.1. (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) b. Suppose now that you continued to assume that the expected return on the market remained at 11%. Now, what would be the expected returns on each stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
Use the following information on states of the economy and stock returns to calculate the standard deviation of returns. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) State of Economy Probability ofState of Economy Security Returnif State Occurs Recession 0.40 −4.50 % Normal 0.50 13.00 Boom 0.10 25.00
Suppose that the Treasury bill rate is 7% rather than 5%, as we assumed in Table 12.1, and the expected return on the market is 11%. Use the betas in that table to answer the following questions. b. Recalculate the expected return on the stocks in Table 12.1. (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) c. Suppose now that you continued to assume that the expected return on the market remained at 11%. Now what would be the expected returns on each stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
Suppose that the Treasury bill rate is 7% rather than 5%, as we assumed in Table 12.1, and the expected return on the market is 11%. Use the betas in that table to answer the following questions. c. Suppose now that you continued to assume that the expected return on the market remained at 11%. Now what would be the expected returns on each stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
Suppose a stock has generated the following annual returns: 13.9%, 12.9% and 7.9%. What was the standard deviation of its returns? Answer in percent, rounded to two decimal places (e. g., 4.32% = 4.32).
Assume these are the stock market and Treasury bill returns for a 5-year period: Year Stock Market Return (%) T-Bill Return (%) 2016 13.0 0.2 2017 21.0 0.8 2018 -6.2 1.8 2019 29.8 2.1 2020 20.6 0.4 Required: What was the risk premium on common stock in each year? What was the average risk premium? What was the standard deviation of the risk premium? (Ignore that the estimation is from a sample of data.)-- expressed in % (NOTE: 11.31% is incorrect)
Assume these were the inflation rates and U.S. stock market and Treasury bill returns between 1929 and 1933: Year Inflation(%) Stock Market Return(%) T-Bill Return(%) 1929 0.5 –13.2 6.1 1930 –5.5 –30.7 2.9 1931 –9.3 –47.6 1.5 1932 –13.2 –8.2 0.8 1933 0.9 64.2 0.6 What was the real return on the stock market in each year? What was the average real return? What was the risk premium in each year? What was the average risk premium?
Suppose a stock has generated the following annual returns: 13.6%, -12.1% and 7.6%. What was the standard deviation of its returns? Answer in percent, rounded to two decimal places (e.g., 4.32% = 4.32).

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