a. With 20-20 hindsight, what was the best investment for the period 19261935? b. Why doesnt everyone
Question:
a. With 20-20 hindsight, what was the best investment for the period 1926–1935?
b. Why doesn’t everyone buy only small stocks as investments?
c. What was the smallest return observed over the 95 years for each of these investments? Approximately when did it occur?
d. About how many times did large stocks (common stocks) return more than 30 percent? How many times did they return less than −20 percent?
e. What was the longest “winning streak” (years without a negative return) for large stocks? For long-term government bonds?
f. How often did the T-bill portfolio have a negative return?
Step by Step Answer:
ANSWER a The best investment for the period 19261935 was longterm government bonds b People do not b...View the full answer
Essentials Of Corporate Finance
ISBN: 9781265414962
11th Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
Related Video
Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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