Use the following information for Questions 21 – 23.

q21. Jeremy Siegel’s books, “The Future for Investors” and “Stocks for the Long Run” illustrate some long-term data on returns in both the stock and the bond market. Siegel tells us that, over the period from 1802 – 2005, the long run average real return in the US equity market is 6.8% and it is 3.5% in the bond market. Based on Siegel’s data, answer the following three questions.

If a relative invested $700 in the equity market in 1802 and allowed it to grow at 6.8% for the next 230 years, how much would the investment be worth in 2032?

Multiple Choice

• $2,152,247,542

• $2,524,457,255

• $2,650,695,857

• $2,609,072,572

q22.

Jeremy Siegel’s books, “The Future for Investors” and “Stocks for the Long Run” illustrate some long-term data on returns in both the stock and the bond market. Siegel tells us that, over the period from 1802 – 2005, the long run average real return in the US equity market is 6.8% and it is 3.5% in the bond market. Based on Siegel’s data, answer the following three questions.

If a relative invested $700 in the bond market in 1802 and allowed it to grow at 3.5% for the next 230 years, how much would the investment be worth in 2032?

Multiple Choice

• $1,547,345

• $1,323,675

• $1,725,547

• $1,911,518

Q23. Based on Siegel’s data, with long (30 year) holding periods, which of the following asset classes has the smallest risk, as measured by standard deviation?

Multiple Choice

• Bonds

• Treasury Bills

• It is impossible to know

• Common stock