What Is the Expected Return for an Individual Firm

question 19

Multiple Choice

What is the expected return for an individual firm?

• A)3%
• B)5%
• C)14%
• D)-5%
• E)0%

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Definitions:

Mutual Funds

Mutual funds are investment vehicles that pool money from numerous investors to purchase a diversified portfolio of stocks, bonds, or other securities.

U.S. Treasury Bonds

Long-term debt securities issued by the United States Department of the Treasury with a maturity of more than ten years.

Equity Mutual Fund

A corporation that pools the funds of investors, including small investors, and uses them to purchase a bundle of stocks.

U.S. Households

Living arrangements in the United States that include all the people who occupy a housing unit, such as families, roommates, or individuals living alone.