The fact that historical returns on Treasury bills are less volatile than common stock returns indicates that:
A) the variance of Treasury bill returns is zero.
B) the standard deviation of Treasury bill returns is negative.
C) the real return on Treasury bills has been negative.
D)common stocks should offer a higher return than Treasury bills.

Question

Quizplus · Accepted Answer

Treasury bills are considered safer investments compared to common stocks, which are more volatile. As a result, investors demand higher returns for the increased risk associated with common stocks, leading to the expectation that common stocks should offer higher returns than Treasury bills.

The Fact That Historical Returns on Treasury Bills Are Less