The Fact That Over the Long Run the Return on Common

question 1

Multiple Choice

The fact that over the long run the return on common stocks has been higher than that on long-term U.S. Treasury bonds is partially explained by the fact that:

• A) A lot more money is invested in common stocks than U.S. Treasury bonds.
• B) There are regulations on the interest rates U.S. Treasury bonds can offer.
• C) The risk premium is higher on common stocks.
• D) Risk-averse investors buy more common stock.