Which one of the following statements is correct based on the period 1926-2016?
A) Long-term government bonds had more volatile annual returns than did the long-term corporate bonds.
B) The standard deviation of the annual rate of inflation was less than 3 percent.
C) U.S Treasury bills have a zero variance in returns because they are risk-free.
D) The risk premium on small-company stocks was less than 10 percent.
E) The risk premium on all U.S. government securities is 0 percent.

Question

Quizplus · Accepted Answer

Long-term government bonds had more volatile annual returns than did the long-term corporate bonds, as they are considered less risky and thus offer lower returns. Corporate bonds, on the other hand, have the potential for higher returns but also carry a higher level of risk.

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