Stocks typically earn a higher average rate of return than bonds because:
A) stocks are riskier than bonds.
B) bonds are unsecured.
C) stocks are better managed than bonds.
D) there is a higher demand for stocks.

Question

Quizplus · Accepted Answer

Stocks are typically riskier than bonds, so investors demand a higher expected return to compensate for that risk. This higher expected return can lead to a higher average rate of return over the long run.

Stocks Typically Earn a Higher Average Rate of Return Than