Which One of the Following Had the Highest Risk Premium

question 80

Multiple Choice

Which one of the following had the highest risk premium for the period 1926-2018?

• A)U.S. Treasury bills
• B)long-term government bonds
• C)large-company stocks
• D)small-company stocks
• E)intermediate-term government bonds

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Definitions:

Management Fees

These are fees paid to managers for their role in operating an investment fund, usually expressed as a percentage of assets under management.

Dividends

Payments made by a corporation to its shareholders, usually as a distribution of profits.

Unbiased Forward Rate

An estimate of future spot interest rates implied by current interest rates, under the assumption that the forward rates are an unbiased predictor of future spot rates.

Future Spot Rate

The anticipated price of an asset at a future date in a spot transaction, which involves the immediate settlement of the transaction.