On average,for the period 1926 through 2012:
A)the real rate of return on U.S.Treasury bills has been negative.
B)small-company stocks have underperformed large-company stocks.
C)the risk premium on long-term corporate bonds has exceeded the risk premium on long-term government bonds.
D)intermediate-term government bonds have produced higher returns than long-term government bonds.
E)the risk premium on large-company stocks has exceeded the risk premium on small-company stocks.

Question

Quizplus · Accepted Answer

The risk premium on long-term corporate bonds has historically exceeded the risk premium on long-term government bonds. This means that investors have demanded a higher return for taking on the additional risk of investing in corporate bonds rather than government bonds with similar maturities. This trend has been observed on average from 1926 through 2012. None of the other statements are true on average for this period.

On Average,for the Period 1926 Through 2012