What Was the Average Annual Rate of Return on Long-Term

question 33

Multiple Choice

What was the average annual rate of return on long-term government bonds (30-year Treasury bonds) during the period 1990 to 2014?

• A) 4.14%
• B) 5.88%
• C) 5.49%
• D) 7.82%

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Definitions:

Expected Returns

The anticipated return on an investment, based on historical averages or statistical analyses.

Variances

Statistical measures that represent the dispersion of data points in a data set relative to its mean, indicating how spread out the data is.

Well-Diversified Portfolio

A portfolio that contains a wide variety of investments across different asset classes and sectors to minimize risk.

Single Index Model

A simplified financial model that describes the return of a security as a linear function of the return of a market index, plus some idiosyncratic noise.