Exhibit 6-3 Consider the Following Information Concerning Stock Returns and Bond Returns

question 19

Multiple Choice

Exhibit 6-3
Consider the following information concerning stock returns and bond returns over the last 75 years:

-Refer to Exhibit 6-3.Currently,Treasury bills yield 2.50% on the secondary market.What is a good estimate for the return on the stock market in the next year given this information?

• A) 6.60%
• B) 7.60%
• C) 10.10%
• D) 11.70%

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Definitions:

Highest Quintile

Refers to the top 20 percent of the population or distribution in terms of income, wealth, or other measurable attributes.

Income Received

The total amount of money or its equivalent received by an individual or organization before taxes and deductions.

Income Earned

The compensation received by individuals for their participation in productive activities, typically through wages, salaries, or profits.

Henry George

A 19th-century economist known for his ideas on taxation, particularly the proposal that a single tax on land value could replace all other taxes, thereby improving economic equality and efficiency.