Which of the Following Statements Is TRUE

question 28

Multiple Choice

Which of the following statements is TRUE?

• A) Except for tax-exempt investors and tax-deferred accounts, annual tax payments increase investment returns.
• B) The only way to maintain purchasing power over time is to invest in bonds.
• C) After adjusting for taxes, long-term bonds consistently outperform stocks.
• D) An asset allocation decision for a taxable portfolio that does not include a substantial commitment to common stocks may make it difficult for the portfolio to maintain real value over time.
• E) None of these are correct.

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Definitions:

Quality of Reinforcement

Refers to how effective a reward or punishment is in strengthening or weakening a behavior.

Performance

The manner in which something or someone functions, operates, or behaves.

Extinction

In psychology, extinction refers to the gradual weakening and eventual disappearance of a conditioned response when the conditioned stimulus is no longer paired with the unconditioned stimulus.

Vicarious Learning

A process of learning through observing the actions and consequences of others, without direct personal experience.