Based on the past 88 years, the inflation rate averaged 3.0 percent and the U.S.Treasury bill yield was 3.5 percent, and the historical risk premium on small-company stocks was 13.2 percent.If these averages hold, what nominal rate of return should you expect to earn on small-company stocks over the next several years?
A) 15.5 percent
B) 16.7 percent
C) 19.7 percent
D) 13.5 percent
E) 13.7 percent
Correct Answer:
Verified
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