Assume a 20-Year Period Produced Small-Company Returns of 16

question 14

Multiple Choice

Assume a 20-year period produced small-company returns of 16.7 percent with a risk premium of 9.8 percent,inflation of 5.4 percent,and long-term government bond returns of 10.1 percent.What was the risk-free rate of return during this period?

• A)4)7%
• B)6)6%
• C)11.3%
• D)6)9%
• E)4)4%

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Definitions:

Population Proportions

A statistical measure that represents the fraction or percentage of units in a population that possess a certain trait or characteristic.

Upper Confidence Bound

The upper limit of a confidence interval, indicating the maximum value within which a population parameter is expected to lie with a certain probability.

Population Proportions

The ratio of members in a population that have a particular attribute to the total number of members in the population.

Z-Value

A measure that describes how far a data point is from the mean, expressed in standard deviations.