Based on the Past 88 Years, the Inflation Rate Averaged

Multiple Choice

Based on the past 88 years, the inflation rate averaged 3.0 percent and the U.S.Treasury bill yield was 3.5 percent, and the historical risk premium on small-company stocks was 13.2 percent.If these averages hold, what nominal rate of return should you expect to earn on small-company stocks over the next several years?

A) 15.5 percent
B) 16.7 percent
C) 19.7 percent
D) 13.5 percent
E) 13.7 percent