Which of the Following Is True of Stocks

question 89

Multiple Choice

Which of the following is true of stocks?

• A) Stock ownership is risky because the investor can never be sure what return they will earn or what the value of their stock holdings will be in the future.
• B) The riskiness of stocks is one reason why their average rate of return has been higher than investments like bonds that guarantee a specified nominal amount in the future.
• C) Both a and b are true.
• D) Neither a nor b is true.

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Definitions:

Price Discriminate

The practice of charging different prices to different consumers for the same good or service, based on differing willingness to pay.

First-Degree Price Discrimination

A pricing strategy where a seller charges each customer the maximum price they are willing to pay.

Producer Surplus

The difference between the amount a producer is paid for a good versus what they would have been willing to accept, reflecting the benefit to producers from participating in the market.

Consumer Surplus

The difference between the total amount consumers are willing to pay for a good or service and the total amount they actually pay.