Which of the Following Statements Is True

question 132

Multiple Choice

Which of the following statements is true?

• A)The expected return and standard deviation of return are greater for common stock than for U.S.treasury bills.
• B)The expected return on common stocks is greater than the expected return on U.S treasury bills,but the standard deviation of return for common stocks is less than the standard deviation of return for U.S.treasury bills
• C)The expected return on common stocks is less than the expected return on U.S treasury bills,but the standard deviation of return for common stocks is greater than the standard deviation of return for U.S.treasury bills.
• D)The expected return and standard deviation of return are less for common stocks than for U.S.treasury bills.

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Definitions:

Coupon Bond

A debt security that pays interest to its holder through coupons at designated times until it matures, when the principal amount is repaid.

Par Value

The face value of a bond or a stock's stated value, as set forth in the corporate charter.

Yield To Maturity

The total return anticipated on a bond if it is held until the maturity date, considering all interest payments at set intervals and the principal repayment at maturity.

Intrinsic Value

The actual, inherent worth of an asset or company, not necessarily matching its current market value.