Between 1928 and 2008, the Average Annual Return on Common

question 36

Multiple Choice

Between 1928 and 2008, the average annual return on common stocks averaged _____%, while the average annual return on Treasury bonds averaged _____%.

• A)11.1, 5.4
• B)11.1, 3.8
• C)11.1, 3.2
• D)none of the above

---

Definitions:

Internal Rate

Typically refers to the Internal Rate of Return (IRR), a financial metric used to estimate the profitability of potential investments.

Payback Period

The length of time it takes for an investment to generate enough cash flow to recover its initial cost.

Salvage Value

The expected remaining valuation of an asset after its service life has ended.

Straight-Line Method

A method of allocating the cost of a tangible asset over its useful life in equal annual installments.