Average Returns Investment Average Return Small Stocks 17.4% Large Stocks 12.3% Long-term Corporate Bonds 6.2% Long-term Government Bonds 5.8% U.S.Treasury Bills 3.8% Inflation 3.1% 10
10 Average Returns Investment Average Return Small Stocks 17.4% Large Stocks 12.3% Long-term Corporate Bonds 6.2% Long-term Government Bonds 5.8% U.S. Treasury Bills 3.8% Inflation 3.1%
Risk Premiums aThe“extra”return earned for taking on risk Treasury bills are considered to be risk-free The risk premium is the return over and above the risk-free rate 11
11 Risk Premiums n The “extra” return earned for taking on risk n Treasury bills are considered to be risk-free n The risk premium is the return over and above the risk-free rate