Question

Select one of the following asset classes: Large-company stocks, small-company stocks, long-term corporate bonds, Long-term U.S. government bonds, or U.S. Treasury Bills. Describe a particular aspect of your chosen asset class from one of the following:
1) Provide the definition
2) Provide an example that belongs to the class
3) Describe the history of total returns
4) Describe the historical mean and standard deviation

Answer 1

I will be selecting United States Government Bonds who are risk free in nature.

1) United States Government Bonds are the bonds which are issued by the United States Government and they are assumed to be risk free nature because there is a backing by the central government that they will be repaid fully at the time of the maturity and it is treated as a risk free bond.

2) 10 year United States treasury bonds will be belonging to the class of United States Government Bond.

3) total return on United States 10 year bonds would be 3% on average if average historical return is to be concerned.

4) historical mean of of these bonds have been around 2.8 % and standard deviation has been around 5% because these are not highly flexible bond and they will be showing consistency in the returns.