The return on a portfolio that is equally invested in large-company stocks and l

Question

The return on a portfolio that is equally invested in large-company stocks and long-term government bonds is ???? percent. The return on a portfolio that is equally invested in small-company stocks and Treasury bills is ???? percent. (Do not include the percent signs (%). Round your answers to 2 decimal places, (e.g., 32.16.))

Investment Average Return
Large-company stocks 14.3%
Small-company stocks 17.9
Long-term corporate bonds 5.3
Long-term government bonds 6.4
U.S. Treasury bills 3.4
Inflation 3

Explanation / Answer

The return on a portfolio that is equally invested in large-company stocks and long-term government bonds= (14.3x.5)+(6.4 x.5)= 10.35% The return on a portfolio that is equally invested in small-company stocks and Treasury bills= (17.9x.5)+(.5x3.4 )= 10.65%

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