Assume that you invest in a portfolio of large-company stocks. Further assume that the portfolio will earn

The excess return is computed as the:    A.  return on a security minus the inflation rate. B.  return on a risky security minus the risk-free rate. C.  risk premium on a risky security minus the risk-free rate. D.  the risk-free rate plus the inflation rate. E.  risk-free rate minus the inflation rate. Refer to section 12.3

27.	Which one of the following earned the highest risk premium over the period 1926-2010?    A.  long-term corporate bonds B.  U.S. Treasury bills C.  small-company stocks D.  large-company stocks E.  long-term government bonds Refer to section 12.3

28.	What was the average rate of inflation over the period of 1926-2010?    A.  less than 2.0 percent B.  between 2.0 and 2.5 percent C.  between 2.5 and 3.0 percent D.  between 3.0 and 3.5 percent E.  greater than 3.5 percent Refer to section 12.3

29.

Assume that you invest in a portfolio of large-company stocks. Further assume that the portfolio will earn a rate of return similar to the average return on large-company stocks for the period 1926-2010. What rate of return should you expect to earn?    A.  less than 10 percent B.  between 10 and 12.5 percent C.  between 12.5 and 15 percent D.  between 15 and 17.5 percent E.  more than 17.5 percent Refer to section 12.3