Long-run average returns on equity investments:
A)are much higher than those on debt.
B)are the same as the average returns on debt.
C)are the same as the average returns on debt plus any dividends.
D)are lower than those on debt.

Question

Quizplus · Accepted Answer

Long-run average returns on equity investments are generally higher than those on debt. This is because equity investments are considered riskier than debt investments, and therefore investors require a higher return to compensate for that risk. Additionally, equity investments provide the opportunity for capital appreciation, which can further increase returns.

Long-Run Average Returns on Equity Investments