Consider the following average annual returns: What is the excess return for the S&P 500?
A)11.5%
B)16.3%
C)0%
D)9.3%

Question

Consider the following average annual returns:  What is the excess return for the S&P 500?
A)11.5% 
B)16.3% 
C)0% 
D)9.3%

Quizplus · Accepted Answer

The excess return is the difference between the average annual return of the S&P 500 and the risk-free rate, which is usually the yield on a US Treasury bond. The risk-free rate is not given in the question, so we cannot calculate the excess return. Therefore, the correct answer is D, which indicates that we do not have enough information to determine the excess return.

Consider the Following Average Annual Returns: What Is the Excess