In Historical Data, We See That Investments with the Highest

question 22

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 lastσ

• 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:

Informal Balance

A state of equilibrium in which elements are arranged non-symmetrically but still achieve a harmonious composition.

Synopsis

A brief summary or overview of the content of a larger work.

Executive Summary

A concise overview that highlights the main points of a larger document or report.

Visual Literacy

The ability to interpret, negotiate, and make meaning from information presented in the form of an image.