Quiz Ch 05 – Forecasting Risk Premium: Methodologies
Essentials of Investments
Bodie, Kane, and Marcus
12th Edition
What method can be employed to predict the risk premium?
What method can be employed to predict the risk premium?
What was the geometric average return observed for large-cap growth stocks from 1927 to 2018?
What was the geometric average return for small/value stocks over the 1927-2018 timeframe?
Which asset class boasted the most remarkable Sharpe ratio from 1927 to 2018?
Order the given assets based on their historical average returns from 1926 to 2019, starting with the highest:
Arrange the assets based on their historical standard deviation from 1926 to 2017, starting with the highest:
Which assets would be considered risk-free in real terms, rather than nominal?
What is the term for the line linking the risk-free rate to the optimal risky portfolio, P, in the mean-standard deviation graph?
What does the historical outperformance of small-firm stocks compared to large-firm stocks, within the framework of market efficiency, imply?
In what range do the majority of studies suggest that investors’ risk aversion typically lies?