Capital market history shows us that the average return relationship from lowest to highest between securities is:
A) inflation, corporate bonds, Treasuries, small company stocks, large company stocks.
B) Treasury bills, inflation, small company stocks, large company stocks.
C) Treasury bills, corporate bonds, government bonds, large common stocks, small company stocks.
D) Treasury bills, government bonds, corporate bonds, large common stocks, small company stocks.
E) There is no ordering.

Question

Quizplus · Accepted Answer

Treasury bills typically have the lowest return, followed by government bonds, corporate bonds, large common stocks, and small company stocks, which have historically had the highest return. This ordering is consistent with the risk-return tradeoff, meaning that higher returns generally come with higher risks.

Capital Market History Shows Us That the Average Return Relationship