Which one of the following accurately orders the rate of return on financial securities from highest to lowest over most of recorded market history (the 1900-2010 period)?
A) Short-term government bills, long-term corporate bonds, long-term government bonds, common stocks
B) Long-term corporate bonds, long-term government bonds, common stocks, short-term government bills
C) Common stocks, long-term government bonds, long-term corporate bonds, short-term government bills
D) Common stocks, long-term corporate bonds, long-term government bonds, short-term government bills
E) Long-term corporate bonds, common stocks, short-term government bills, long-term government bonds
F) None of the above.

Question

Quizplus · Accepted Answer

The order of return on financial securities from highest to lowest over most of recorded market history is common stocks, long-term corporate bonds, long-term government bonds, and short-term government bills, which is reflected in option D. Over the long term, equity investments (common stocks) have had the highest average returns, followed by corporate bonds, government bonds, and lastly short-term government bills which have the lowest returns.

Which One of the Following Accurately Orders the Rate of Return