Average annual rate of return on common stock over many year

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Answers to odd-numbered problems appear at the end of the book. Answers to even-numbered problems and additional exercises are available in the Instructor Resources within McGraw-Hill's Connect (see the Preface for more information). ,

Question 1. Average annual rate of return on common stocks over many years has exceeded the return on government bonds in the United States. Why do we observe this pattern?

Question 2. Suppose the realized rate of return on government bonds exceeded the return on common stocks one year. How would you interpret this result?

Question 3. What is most important to investors: the number of a company's shares they own, the price of the company's stock, or the value of their shareholdings in the company? Why?

Reference no: EM132450898

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