Recent Return History Use Table 12.1 to calculate the average return over the years 1996 through 2000 for large-company stocks, long-term government bonds, and Treasury bills.

Question

Recent Return History Use Table 12.1 to calculate the average return over the years 1996 through 2000 for large-company stocks, long-term government bonds, and Treasury bills.

Table 12.1

Year	Large- Company Stocks	Long-Term Government Bonds	U.S. Treasury Bills	Consumer Price Index	Year	Large- Company Stocks	Long-Term	U.S. Treasury Bills	Consumer Price Index
1926	13.75%	5.69%	3.30%	-1.12%	1969	-8.43	-5.63	6.90	6.20
1927	35.70	6.58	3.15	-2.26	1970	3.94	18.92	6.50	5.57
1928	45.08	1.15	4.05	-1.16	1971	14.30	11.24	4.36	3.27
1929	-8.80	4.39	4.47	.58	1972	18.99	2.39	4.23	3.41
1930	-25.13	4.47	2.27	-6.40	1973	-14.69	3.30	7.29	8.71
1931	-43.60	-2.15	1.15	-9.32	1974	-26.47	4.00	7.99	12.34
1932	-8.75	8.51	.88	-10.27	1975	37.23	5.52	5.87	6.94
1933	52.95	1.92	.52	.76	1976	23.93	15.56	5.07	4.86
1934	-2.31	7.59	.27	1.52	1977	-7.16	.38	5.45	6.70
1935	46.79	4.20	.17	2.99	1978	6.57	-1.26	7.64	9.02
1936	32.49	5.13	.17	1.45	1979	18.61	1.26	10.56	13.29
1937	-35.45	1.44	.27	2.86	1980	32.50	-2.48	12.10	12.52
1938	31.63	4.21	.06	-2.78	1981	-4.92	4.04	14.60	8.92
1939	-1.43	3.84	.04	.00	1982	21.55	44.28	10.94	3.83
1940	-10.36	5.70	.04	.71	1983	22.56	1.29	8.99	3.79
1941	-12.02	.47	.14	9.93	1984	6.27	15.29	9.90	3.95
1942	20.75	1.80	.34	9.03	1985	31.73	32.27	7.71	3.80
1943	25.38	2.01	.38	2.96	1986	18.67	22.39	6.09	1.10
1944	19.49	2.27	.38	2.30	1987	5.25	-3.03	5.88	4.43
1945	36.21	5.29	.38	2.25	1988	16.61	6.84	6.94	4.42
1946	-8.42	.54	.38	18.13	1989	31.69	18.54	8.44	4.65
1947	5.05	-1.02	.62	8.84	1990	-3.10	7.74	7.69	6.11
1948	4.99	2.66	1.06	2.99	1991	30.46	19.36	5.43	3.06
1949	17.81	4.58	1.12	-2.07	1992	7.62	7.34	3.48	2.90
1950	30.05	-.98	1.22	5.93	1993	10.08	13.06	3.03	2.75
1951	23.79	-.20	1.56	6.00	1994	1.32	-7.32	4.39	2.67
1952	18.39	2.43	1.75	.75	1995	37.58	25.94	5.61	2.54
1953	-1.07	2.28	1.87	.75	1996	22.96	.13	5.14	3.32
1954	52.23	3.08	.93	-.74	1997	33.36	12.02	5.19	1.70
1955	31.62	-.73	1.80	.37	1998	28.58	14.45	4.86	1.61
1956	6.91	-1.72	2.66	2.99	1999	21.04	-7.51	4.80	2.68
1957	-10.50	6.82	3.28	2.90	2000	-9.10	17.22	5.98	3.39
1958	43.57	-1.72	1.71	1.76	2001	-11.89	5.51	3.33	1.55
1959	12.01	-2.02	3.48	1.73	2002	-22.10	15.15	1.61	2.38
1960	.47	11.21	2.81	1.36	2003	28.89	2.01	.94	1.88
1961	26.84	2.20	2.40	.67	2004	10.88	8.12	1.14	3.26
1962	-8.75	5.72	2.82	1.33	2005	4.91	6.89	2.79	3.42
1963	22.70	1.79	3.23	1.64	2006	15.79	.28	4.97	2.54
1964	16.43	3.71	3.62	.97	2007	5.49	10.85	4.52	4.08
1965	12.38	.93	4.06	1.92	2008	-37.00	41.78	1.24	.09
1966	-10.06	5.12	4.94	3.46	2009	26.46	-25.61	.15	2.72
1967	23.98	-2.86	4.39	3.04	2010	15.06	7.73	.14	1.50
1968	11.03	2.25	5.49	4.72

Accepted Answer

We calculate the averages as follows:

Actual Returns
Treasury Bills	Long-Term Government Bonds	Large-Company Stocks	Year
.0514	.0013	.2296	1996
.0519	.1202	.3336	1997
.0486	.1445	.2858	1998
.0480	-.0751	.2104	1999
.0598	.1722	-.0910	2000
.0519	.0726	.19368	Average

Question 12.S-TP.1: Recent Return History Use Table 12.1 to calculate the averag...

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