Which one of the following statements is correct based on the historical returns for the period 1926-2016?
A) For the period, Treasury bills yielded a higher rate of return than long-term government bonds.
B) The inflation rate exceeded the rate of return on Treasury bills during some years.
C) Small-company stocks outperformed large-company stocks every year during the period.
D) Bond prices, in general, were more volatile than stock prices.
E) For the period, large-company stocks outperformed small-company stocks.

Question

Quizplus · Accepted Answer

Based on the historical returns for the period 1926-2016, option B is correct, i.e., the inflation rate exceeded the rate of return on Treasury bills during some years. Option A is incorrect as long-term government bonds yielded a higher rate of return than Treasury bills. Option C is incorrect as small-company stocks did not outperform large-company stocks every year during the period. Option D is incorrect as bond prices were not more volatile than stock prices in general. Option E is also incorrect as small-company stocks outperformed large-company stocks for the period.

Which One of the Following Statements Is Correct Based on the Historical