What does half a century of monthly U.S. data say about the real interest rate and whether riskier assets really pay more?
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Four facts from US financial market history
List the four facts in order and mark which two the 1946–2001 monthly table supports directly.
Real rate per month
Copy the inflation and one-year T-bill rows of the table, compute the real rate as nominal minus inflation, and state the result in basis points per month.
Average return rising with standard deviation
Tabulate average and standard deviation for T-bills, T-notes, the VW and EW indexes and Motorola, define value weighted and equal weighted, and note the T-bill's nonzero standard deviation and its source.
Yields to maturity versus total returns
Record the 16–17% T-bill yields around 1981 and the 4.17% thirty-year yield in autumn 2008, distinguish yield to maturity from total return, and note that rates are hard to forecast.