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The Expected Rate of Return for Equities: A TEN-YEAR AND A THIRTY-YEAR FORECAST

Henry Townsend
Business Economics
Vol. 38, No. 4 (October 2003), pp. 28-34
Stable URL: http://www.jstor.org/stable/23490095
Page Count: 7
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Abstract

In their defined benefit plans, most companies assume a rate of return for the assets that accords with the historical return on equities. By analyzing the sources of return, however, it can be easily seen that a repetition of that historical performance is improbable. A model is presented of the total rate of return for equities, based on the growth of per capita GDP. Forecasts of returns over the next ten and thirty years are presented that are much lower than those commonly assumed.

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