Question

In: Finance

Historically which has been true? Multiple Choice The returns on small-company stocks were less volatile than...

Historically which has been true?

Multiple Choice

  • The returns on small-company stocks were less volatile than the returns on large-company stocks.

  • The risk-free rate of return remained constant over the time period.

  • U.S. Treasury bills had a positive average real rate of return.

  • Bonds had an average rate of return that exceeded the average return on stocks.

  • The inflation rate was just as volatile as the return on long-term bonds.

Solutions

Expert Solution

Historically, U.S. Treasury bills had a positive average real rate of return.

The returns on small-company stocks were found to be more volatile than the returns on large-company stocks.

There were fluctuations in the risk-free rate of return over the time period.

U.S. Treasury bills had a positive average real rate of return.

The average return on stocks exceeded the average rate of return from the bonds.

Long term bonds were found to be more volatile as compared to the volatility of the inflation rates.


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