The Fact That Over the Long Run the Return on Common

question 1

Multiple Choice

The fact that over the long run the return on common stocks has been higher than that on long-term U.S. Treasury bonds is partially explained by the fact that:

• A) A lot more money is invested in common stocks than U.S. Treasury bonds.
• B) There are regulations on the interest rates U.S. Treasury bonds can offer.
• C) The risk premium is higher on common stocks.
• D) Risk-averse investors buy more common stock.

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Definitions:

Logical Appeals

Arguments or persuasive techniques that use reasoning and evidence to convince an audience.

Emotional Appeal

Persuasive approach that calls on audience feelings and sympathies rather than facts, figures, and rational arguments.

Rational Argument

A logical way of presenting a belief, conclusion, or stance supported by evidence and reasoning.

Logical Appeal

An approach that relies on logic and proof, instead of appealing to the emotions and compassion of the audience.