Which one of the following had the highest risk premium for the period 1926-2016?
A) U.S. Treasury bills
B) long-term government bonds
C) large-company stocks
D) small-company stocks
E) intermediate-term government bonds

Question

Quizplus · Accepted Answer

Small-company stocks had the highest risk premium during the period 1926-2016. This is evident from the higher return that small-company stocks provided compared to U.S. Treasury bills, long-term government bonds, large-company stocks, and intermediate-term government bonds. While small-company stocks had more fluctuations in returns and higher volatility, they also provided higher returns over the long term.

Which One of the Following Had the Highest Risk Premium