Professor Jeremy Siegel, of the University of Pennsylvania, Did Research

question 44

Multiple Choice

Professor Jeremy Siegel, of the University of Pennsylvania, did research showing that:

• A) owning stocks over the long run produces returns below the risk-free return.
• B) if an investor owns stocks for a very short time the risk is greater than if the stocks are held for a long time.
• C) the return on the S&P 500 for a 25-year period often produces returns below zero.
• D) bonds really are less risky to hold over the long term.

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Definitions:

Allocative Efficiency

A condition of distributing resources where improving the situation of one person results in the detriment of another.

Economic Profits

The surplus remaining after deducting both the explicit and implicit costs from total revenues; represents extra earnings above the next best alternative.

Fair Return

The reasonable profit that a business can expect to make, considering the risk involved.

Pure Monopoly

A market structure where a single firm is the sole producer of a product or service with no close substitutes, giving it significant control over price.