Historically, the Average Excess Return of the S&P 500 Over

question 36

Multiple Choice

Historically, the average excess return of the S&P 500 over the return of U.S. Treasury bonds has been ________ and is proxy for the market risk premium.

• A) between 10% and 12%
• B) between 14% and 16%
• C) between 5% and 7%
• D) between 11% and 13%

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Definitions:

Security Market Line

A representation in finance that shows the expected return of investments at different levels of risk, based on the capital asset pricing model (CAPM).

Beta

A gauge of the variability of a stock's value relative to the comprehensive market.

Market Average

A statistical measure that represents the overall market or a specific segment of it, commonly used to track market performance.

Return

The profit or deficit experienced on an investment during a given period, represented as a percentage of the original investment's value.