question archive In the long-run, the average return of stock is greater than the average return of bonds, because: A
In the long-run, the average return of stock is greater than the average return of bonds, because: A
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In the long-run, the average return of stock is greater than the average return of bonds, because:
A. investors require a greater return to compensate for the less liquidity of stocks
B. investors require a greater return to compensate for the more liquidity of stocks
C. investors require a greater return to compensate for the greater risk of stocks
D. investors require a greater return to compensate for the smaller risk of stocks
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In the long-run, the average return of a stock is greater than the average return of bonds because: C. investors require a greater return to compensate for the greater risk of stock
Bonds present less risk to an investor because more is known about their expected performance. There are more unknowns with stocks than with a bond, so stocks represent a riskier alternative to bonds. For an investor to buy a stock instead of a bond, the potential return is higher. History has proven that stocks outperform bonds in the long term, but there is much more fluctuation in the price of stocks versus bonds.
