Over the Past Two Centuries,the Average Annual Rates of Return

question 37

Multiple Choice

Over the past two centuries,the average annual rates of return were about

• A)5 percent for stocks and about 1.5 percent for short-term government bonds.
• B)6 percent for stocks and about 2.5 percent for short-term government bonds.
• C)8 percent for stocks and about 3 percent for short-term government bonds.
• D)None of the above is correct.

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Definitions:

Energy Efficiency

The goal of using less energy to provide the same service or achieve the same outcome.

Time-Value Of Money

The idea that a specific amount of money is more valuable to a person the sooner it is received because the money can be placed in a financial account or investment and earn compound interest over time; the opportunity cost of receiving a sum of money later rather than earlier.

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid to the lender over a specified period of time.

Present Value

The today's value of money to be received in the future or continuous cash inflows, adjusted for a certain interest rate.