Over the 50-year period from 1950 to 1999, 3-month Treasury bills earned a higher average annual rate of return than long-term government bonds
Indicate whether the statement is true or false.
Answer: FALSE
Explanation: Long-term government bonds earned an average annual return of 5.94%, and Treasury bills earned an average return of 5.23%.
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Extreme Adventures Inc. needs to raise capital and has hired Solomon Sisters to be its investment banker (IB)
Solomon recommends a sale of common stock and estimate the firm could raise a gross amount of $7,500,000 if they could sell 300,000 shares of stock at $25 per share. Solomon has offered two compensation methods for its work on the sale of these securities. The first is a best efforts arrangement where Extreme will pay Solomon $1.00 for every share issued. The second is a firm-commitment of $7,000,000. If Solomon is able to sell the entire issue at the recommended price, how much money will it make under each arrangement? What is the break-even point in sales percent between firm commitment and best efforts for Extreme Adventures? What will be an ideal response?