Question

Which of the following statements are true based on the historical record for 1926–2016? Multiple Choice Risk-free securities produce a positive real rate of return each year. Bonds are generally a safer, or less risky, investment than are stocks. Risk and potential reward are inversely related. The normal distribution curve for large-company stocks is narrower than the curve for small-company stocks. Returns are more predictable over the short term than they are over the long term.

Answer 1

Answer: Bonds are generally a safer, or less risky, investment than are stocks

Explanation: The biggest pro of investing in stocks over bonds is that history shows, stocks tend to earn more than bonds - especially long term. Additionally, stocks can offer better returns if the company growth is exponential, earning the investor potentially millions on an originally minuscule investment.

Many investors are under the impression that bonds are automatically safer than stocks. After all, bonds pay investors a regular fixed income, and their prices are much less volatile than those of stocks. Conversely, a stock is low-risk for the issuing company, but it's high-risk for investors.