Which One of the Following Statements Concerning U

question 90

Multiple Choice

Which one of the following statements concerning U.S.Treasury bills is correct for the period 1926- 2010?

• A)The annual rate of return always exceeded the annual inflation rate.
• B)The average risk premium was 0.7 percent.
• C)The annual rate of return was always positive.
• D)The average excess return was 1.1 percent.
• E)The average real rate of return was zero.

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Definitions:

IRR

Internal Rate of Return, a financial metric used to estimate the profitability of potential investments, calculating the interest rate at which the net present value of all cash flows (both positive and negative) from a project or investment equals zero.

Required Rate of Return

The minimum annual percentage return that an investor expects to achieve when investing in a particular asset or project.

NPV

Net Present Value, a financial metric used to assess the profitability of an investment, calculated as the difference between the present value of cash inflows and outflows.

IRR

Internal Rate of Return is a financial metric used to evaluate the profitability of potential investments, representing the discount rate that makes the net present value of all cash flows from a particular project equal to zero.