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Homework answers / question archive / Consider the following average annual returns:   Investment         Average Return   Small Stocks         18

Consider the following average annual returns:   Investment         Average Return   Small Stocks         18

Finance

Consider the following average annual returns:

 

Investment         Average Return

 

Small Stocks         18.4%

 

S&P 500             12.3%

 

Corporate Bonds      7.5%

 

Treasury Bonds       6.2%

 

Treasury Bills         3.9%

 

The excess return for the portfolio of small stocks is _____%.

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Computation of Excess Return for Small Stocks:

Excess Return for Small Stocks = Average Return of Small Stocks - Average Return of Treasury Bills

= 18.4% - 3.9%

Excess Return for Small Stocks = 14.5%

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