In a portfolio, stocks and bonds are
A) different in risk and return.
B) not highly correlated.
C) highly correlated.
D) Both A and B are correct.

Question

Quizplus · Accepted Answer

Stocks and bonds typically differ in risk and return characteristics, with stocks generally being riskier but offering higher potential returns, while bonds are considered safer with lower returns. Additionally, stocks and bonds are not highly correlated, meaning their prices don't always move in the same direction; this diversification can reduce risk in a portfolio.

In a Portfolio, Stocks and Bonds Are