Which of the Following Statements Best Describes the Relationship Between

question 69

Multiple Choice

Which of the following statements best describes the relationship between stocks and bonds with respect to risk and return?

• A)Although bonds are riskier than stocks, bonds have historically earned a higher rate of return.
• B)Even though there is a higher expected rate of return with bond ownership relative to stock ownership, there is no guarantee that a higher return will be realized by any given instrument or investor.
• C)Although stocks are riskier than bonds, bonds have historically earned a higher rate of return.
• D)Other things equal, ownership of stocks involves greater risk and greater expected return than ownership of bonds or other financial assets.

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Definitions:

Sign Test

A nonparametric test used to determine if there is a median difference between paired observations.

Confidence Interval

A variety of values, calculated from sample data, that is presumed to hold the value of an unknown population characteristic.

Middle Distance Runners

Athletes who specialize in running races that are longer than sprints but shorter than long-distance events, typically ranging from 800 meters to 3000 meters.

Training Effect

The improvement in physical fitness or skill level as a result of undergoing specific training routines or exercises.