The Nominal Rate of Return on Large-Company Stocks Consists of A

question 19

Multiple Choice

The nominal rate of return on large-company stocks consists of a:

• A) Risk-free rate of return plus an inflation adjustment.
• B) Real rate of return plus the Treasury bill rate of return.
• C) Risk premium plus the Treasury bill rate of return.
• D) Risk-free rate of return plus a bond premium.
• E) Real risk-free rate of return plus a risk premium.

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Definitions:

NATO

The North Atlantic Treaty Organization is a military alliance formed for mutual defense against aggression, primarily established in 1949.

Marshall Plan

An American initiative passed in 1948 to aid Western Europe, in which the U.S. gave over $12 billion for economic recovery post-World War II to counter the spread of communism.

Truman Doctrine

A United States policy, announced by President Truman in 1947, to provide military and economic assistance to countries threatened by communism.