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:

Minimum Variance Portfolio

A portfolio constructed to achieve the lowest possible volatility or variability in returns among a set of potential assets.

Standard Deviation

A statistical measure that quantifies the dispersion or variability of a set of data points or investment returns around their mean (average).

Two-asset Portfolio

A portfolio comprising only two assets, used to study the principles of diversification and risk-return trade-off in finance.

Correlation Coefficient

A statistical measure that indicates the extent to which two variables change together, ranging from -1 (perfectly inverse) to +1 (perfectly direct).