Capital market history shows us that the average return relationship between securities where:
A) lowest return is inflation, then corporate bonds, Treasuries, small company stocks, to highest return all common stocks.
B) lowest return is Treasury bills, inflation, small company stocks, highest return all common stocks.
C) lowest return is Treasury bills, corporate bonds, government bonds, all common stocks, highest small company stocks.
D) lowest return is Treasury bills, government bonds, corporate bonds, all common stocks, highest small company stocks.

Question

Quizplus · Accepted Answer

Historically, the average return on investments increases from safer, lower-yield investments to riskier, higher-yield ones. Treasury bills, being short-term government securities, typically offer the lowest returns. Government bonds, which are longer-term, offer slightly higher returns. Corporate bonds, depending on their risk level, offer higher returns than government securities. Common stocks, representing ownership in companies, generally offer higher returns than bonds due to the higher risk involved. Small company stocks often offer the highest returns among common stocks because they have more growth potential, albeit with higher risk.

Capital Market History Shows Us That the Average Return Relationship