Annual Returns for Stocks, Bonds, and T-Bills 2000 to 2009 (S&P; 500) Bonds T-bi

Question

Annual Returns for Stocks, Bonds, and T-Bills 2000 to 2009 (S&P; 500) Bonds T-bills 20.1% 4.6 17.2 2.1 7.7 6.5 1.9 9.8 22.7 9.1% 2000 Annual return 2001 Annual return -11.9 2002 Annual return -22.1 2003 Annual return 2004 Annual return 2005 Annual return 2006 Annual return 2007 Annual return 2008 Annual return 2009 Annual return 28.7 10.9 4.9 15.8 3.5 -35.5 23.5 3.5 1.6 1.0 1.4 3.1 4.7 4.4 1.5 0.2 -12.2 You have a portfolio with an asset allocation of 30 percent stocks, 52 percent long-term Treasury bonds and 18 percent T-bills. Use these weights and the returns given in the above table to compute the return of the portfolio in the year 2000 and each year since. Then compute the average annual return and standard deviation of the portfolio. (Negative answers should be indicated with a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.) Portfolio Return 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Average Std dev

Explanation / Answer

Year Stock Bond Tbills Return 2000 -9.10% 20.10% 5.90% 8.78% Return include 30% srock +52% Bond+18%bills 2001 -11.90% 4.60% 3.50% -0.55% Return include 30% srock +52% Bond+18%bills 2002 -22.10% 17.20% 1.60% 2.60% Return include 30% srock +52% Bond+18%bills 2003 28.70% 2.10% 1.00% 9.88% Return include 30% srock +52% Bond+18%bills 2004 10.90% 7.70% 1.40% 7.53% Return include 30% srock +52% Bond+18%bills 2005 4.90% 6.50% 3.10% 5.41% Return include 30% srock +52% Bond+18%bills 2006 15.80% 1.90% 4.70% 6.57% Return include 30% srock +52% Bond+18%bills 2007 3.50% 9.80% 4.40% 6.94% Return include 30% srock +52% Bond+18%bills 2008 -35.50% 22.70% 1.50% 1.42% Return include 30% srock +52% Bond+18%bills 2009 23.50% -12.20% 0.20% 0.74% Return include 30% srock +52% Bond+18%bills Average(using average function in excel) 4.93% Standard deviation(using stdev.p function in excel) 3.44%

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