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Acrobat Question 11: Long-term investing in the US stock market over the past 90 years (1926-2015) has led to incredible returns. What is the average
Acrobat Question 11: Long-term investing in the US stock market over the past 90 years (1926-2015) has led to incredible returns. What is the average risk premium one has earned for investing in large US stocks over the period? (a) Around 3% (b) Around 9% (C) Around 15% (d) None of the above Question 12: Define what the term 'risk premium' is: (2) An asset's risk premium is the premium that investors earn for bearing its risk so it is the spread between the asset's average historical returns and its volatility (b) An asset's risk premium is the premium that investors earn for bearing its risk so is defined as the asset's historical geometric retur over its volatility (C) An asset's risk premium is the premium that investors car for bearing its risk, and as such is simply the asset's return less the risk-free rate (which is often defined as the US Treasury bill rate) (d) None of the above are even remotely true Question 13: In the last lecture, we looked at the long-term returns of small US company stocks, large US company stocks, US Treasury bills, and long-term I corporate bonds. List these assets in terms of their historical returns (from 1926-2015) sorted from highest return to lowest return (a) Large-company stocks, small company stocks, long-term corporate bonds, US Treasury bills (b) Long-term corporate bonds, large-company stocks, small-company stocks, US Treasury bills (c) Small-company stocks, large-company stocks, long-term corporate bonds, US Treasury bills (d) None of the above are accurate
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