The Fact That Historical Returns on Treasury Bills Are Less

question 109

Multiple Choice

The fact that historical returns on Treasury bills are less volatile than common stock returns indicates that:

• A)the variance of treasury bill returns is zero.
• B)the standard deviation of treasury bill returns is negative.
• C)the real return on treasury bills has been zero.
• D)common stocks should offer a higher return than treasury bills.

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Definitions:

Perfect Competition

A market structure characterized by many buyers and sellers, identical products, and free entry and exit, leading to efficient outcomes.

Price Discrimination

A pricing approach in which the same provider sells identical or nearly identical products or services for varying prices across different markets.

Monopolists

Individuals or firms that are the sole providers of a unique product or service in a market, with the power to control prices and exclude competitors.

Price Discrimination

A pricing strategy that charges customers different prices for the same product or service based on what the seller thinks they can get the customer to agree to.