The Favourable Returns of Shares in Australia Over the Past

question 6

Multiple Choice

The favourable returns of shares in Australia over the past 100 years is partly explained by the concept that share prices [blank] when there is [blank] news about future profits.

• A)stagnate; good
• B)rapidly decrease; good
• C)slightly increase; bad
• D)go up; good

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Definitions:

Equity Investments

Investments in stocks or shares, representing ownership in a company or entity and participation in its profits.

Risk Free Rate

The rate of return on an investment with no risk of financial loss, typically represented by the yield on government bonds.

Market Premium

The additional return an investor expects to receive from a market portfolio compared to the risk-free rate.

Equity Investments

Financial investments in shares of companies, giving the holder ownership interest in the company.