Because of the Relationship Between an Asset's Real Rate of Return

question 108

Multiple Choice

Because of the relationship between an asset's real rate of return and its risk, one would expect to find all of the following, except one. Which one?

• A) Corporate stocks have higher rates of return than U.S. Treasury bonds.
• B) Corporate stocks have higher rates of return than U.S. Treasury bills.
• C) Corporate stocks have higher rates of return than corporate bonds.
• D) Stocks of smaller companies have higher expected rates of return than stocks of larger companies.
• E) Mutual funds including stocks of companies in politically volatile developing countries do not have as high a rate of return as mutual funds restricted to stocks of companies in developed economies.

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Definitions:

Customer Satisfaction

A measure of how products and services supplied by a company meet or exceed customer expectation.

Appraisal Costs

Costs associated with the inspection and testing of both raw materials and finished products to ensure quality standards are met.

Prevention Costs

Costs that are incurred to keep defects from occurring.

Internal Failure Costs

Costs associated with defects found before the delivery of a product to the customer, including scrap, rework, and downtime.