Problem
The following return series comes from Global Financial Data. $\begin{array}{ccccc}\text { Year } & \text { Large Stocks LT Gov Bonds } & \begin{array}{c}\text { US T-bills } \\ \text { (Rf asset) }\end{array} & \begin{array}{c}\text { CPI } \\ \text { (inflation) }\end{array} \\ 2018 & -5.28 \% & -1.25 \% & 0.80 \% & 2.10 \% \\ 2019 & 25.45 \% & 3.35 \% & 1.20 \% & 1.10 \% \\ 2020 & 18.16 \% & 10.25 \% & 0.75 \% & 1.88 \% \\ 2021 & 28.70 \% & -1.54 \% & 0.81 \% & 7.00 \% \\ 2022 & -19.78 \% & -8.55 \% & 2.20 \% & 6.50 \%\end{array}$ Calculate the average nominal return earned on large-company stocks. (Enter percentages as decimals and round to 4 decimals)
Solution
Step 1 ：Given the return series for large-company stocks over 5 years as follows: -5.28%, 25.45%, 18.16%, 28.7%, -19.78%.
Step 2 ：Calculate the sum of these returns.
Step 3 ：Divide the sum by the total number of years (5) to get the average return.
Step 4 ：The average nominal return earned on large-company stocks is \(\boxed{9.45\%}\).
