From 1926 to 2008 the World Stock Portfolio Offered _____

question 56

Multiple Choice

From 1926 to 2008 the world stock portfolio offered _____ return and _____ volatility than the portfolio of large U.S.stocks.

• A) lower; higher
• B) lower; lower
• C) higher; lower
• D) higher; higher

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Definitions:

Term Structure

The relationship between interest rates (or yields) and different terms (or maturities) for debt securities.

Liquidity Premium

The additional return that investors require for holding securities with low liquidity, compensating them for the higher risk associated with difficulty in selling the asset quickly at its fair market value.

Term Structure

The relationship between interest rates or yields of different debt instruments, usually depicted by a yield curve showing various maturities.

Real Rate of Interest

The yield a investor foresees receiving, once inflation adjustments are made.