During this decade, the annual inflation During the 1990s, average annual growth
ID: 2582628 • Letter: D
Question
During this decade, the annual inflation During the 1990s, average annual growth rates rate averaged 7.4 pere rcent. Small-company stocks, 15.8 percent 20-year government bonds, 12.6 percent 20-year corporate bonds, 13 percent Treasury bills, 8.9 percent Residential real estate, 11.5 percent During this decade, the annual inflation rate averaged 5. During the 2000s, annual growth rates have so far averaged as Small-company stocks, 7 percent 20-year government bonds, 1 1 . 9 percent 20-year corporate bonds, 12.5 percent Treasury bills, 5.9 percent Residential real estate, 5.0 percent During this period, the annual inflation rate averaged 4.2 percent. Discussion (1) Comments on the best long-term investment(s) for your firm (2) Can you use the visual aid in which you chart annual growth rates for investments from the 1970s to the present?Explanation / Answer
Generally Treasury bills are the Risk free Return (Rf)
In 1990s Treasury Bill growth rate was 8.9
20 year Govt Bonds and 20 Year Corporate bonds are best securities to invest.
Further the Government bonds carry less risk as compared to corporate bonds.
But Return opportunities are more in Corporate Bonds.
where inflation is decreasing, the firm should invest in Corporate Bonds.
2. I am unable to understand the second part of the question.
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