Which One of the Following Statements Is Correct Based on the Historical

question 52

Multiple Choice

Which one of the following statements is correct based on the historical returns for the period 1926-2009?

• A) For the period, Treasury bills yielded a higher rate of return than long-term government bonds.
• B) The inflation rate exceeded the rate of return on Treasury bills during some years.
• C) Small-company stocks outperformed large-company stocks every year during the period.
• D) Bond prices, in general, were more volatile than stock prices.
• E) For the period, large-company stocks outperformed small-company stocks.

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Definitions:

Economic Profit

The difference between revenue generated from output and the opportunity costs of inputs used, considering both explicit and implicit costs.

Accounting Profit

The profit of a company after all expenses have been deducted from revenues, but before deducting income taxes.

AVC (Average Variable Cost)

The total variable cost divided by the quantity of output produced; it varies with production.

MC (Marginal Cost)

Marginal Cost is the change in total cost that arises when the quantity produced is incremented by one unit.