The return on an investment in stock:
A)is subject to risk but is generally non-negative like a savings account.
B)has a standard deviation that has historically been small relative to its average value.
C)consists of dividend and capital gains yields.
D)is always very risky.

Question

Quizplus · Accepted Answer

The return on an investment in stock consists of dividend and capital gains yields. Option A is incorrect because the stock market is subject to risk and returns can be negative as opposed to a savings account. Option B is incorrect because the standard deviation of stock returns is typically larger than that of other investments. Option D is incorrect because while stock investments can be risky, they are not always very risky.

The Return on an Investment in Stock