Which One of the Following Is a Correct Ranking of Securities

question 45

Multiple Choice

Which one of the following is a correct ranking of securities based on their volatility over the period of 1926-2007? Rank from highest to lowest.

• A)large company stocks, U.S.Treasury bills, long-term government bonds
• B)small company stocks, long-term corporate bonds, large company stocks
• C)small company stocks, long-term corporate bonds, intermediate-term government bonds
• D)large company stocks, small company stocks, long-term government bonds
• E)intermediate-term government bonds, long-term corporate bonds, U.S.Treasury bills

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Definitions:

Constant Dividend Growth Rate

The rate at which a company's dividend payments are expected to grow at a constant percentage each year.

Expected Return

Expected return is the anticipated average return of an investment over a specified period, taking into account both expected gains and potential losses.

Required Return

The Required Return is the minimum expected return an investor anticipates on an investment to make it worthwhile, encompassing the risk-level associated with the investment.

Marginal Investor

An investor whose actions and choices at the margin are believed to determine the price of a stock.