Rank (Lowest to Highest) the Following Securities in Terms of the Risk-Expected

question 92

Essay

Rank (lowest to highest) the following securities in terms of the risk-expected return tradeoff from the investors' viewpoint: common stock, corporate bonds,
U.S. Treasury bonds, preferred stock.

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Definitions:

Average Total Cost

The total cost of production divided by the number of goods produced, representing the average cost per unit of output.

Diseconomies of Scale

A situation where as a firm grows larger, the costs per unit increase, due to factors like coordination and operational inefficiencies.

Diminishing Returns

A principle stating that adding more of one factor of production, while holding others constant, will at some point yield lower incremental per-unit returns.

Short Run

A time period during which at least one input, such as plant size, is fixed and cannot be changed by the firm.