A few easy Q's (Rm Portfolio and Interest rates) numbers, always, returns, problem, realistic

JustasS

1) Where can I find the "return on the market portfolio" for the real world? I looked at returns of the S&P 500 for the last 5 years and it was like .17% or 1.7% but I always see numbers like 10%... is 10% realistic at all? I have to use CAPM for a school project and I don't know what to use here... my professor used like 12% for an old project he did but that doesn't seem right... The problem with school and books is that they always give you all of the information and in the real world things do not seem to work out like they do in textbooks...

2) Example: Open market purchase

If the Fed buys securities, the money supply increases and interest rates decrease(easy enough). What I do not understand is how/when the interest rate goes down. It's easy to see on the graph, but I don't really understand it. Do interest rates go down the second the Fed gives banks more money (Money supply > money demand so they have to lower rates to lend more) or does it take time? It says "banks make loans based on the increase in excess reserves". Does that mean that banks just simply try to lend more at the same rate (this doesn't seem to make sense because if supply already equals demand, why would people borrow more?) or does it mean that the banks immediatley reduce interest rates to increase demand?

When they are referring to "interest rates", are they simply saying the rate that you can borrow from the bank? Is it the interest rate of bonds? The interest rate on bank deposits? Clearly I'm a little confused.

Really appreciate it guys