In Historical Data, We See That Investments with the Highest

question 50

Multiple Choice

In historical data, we see that investments with the highest average annual returns also tend to have the highest standard deviations of annual returns.This observation supports the notion that there is a positive correlation between risk and return.Which of the following answers correctly ranks investments from highest to lowest risk (and return) , where the security with the highest risk is shown first, the one with the lowest risk last?

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

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Definitions:

Hydrogenation

The chemical reaction that adds hydrogen (H2) across unsaturated bonds in molecules, such as converting alkenes to alkanes.

ΔH°

The standard enthalpy change of a reaction, measured under standard conditions (1 atm, 298.15K), representing the difference in enthalpy between products and reactants.

Stability

The resistance of a chemical compound to change in its chemical structure or composition under specific conditions.

Descriptive Term

A word or phrase that describes or characterizes an object, situation, or concept without expressing its inherent nature.