Because of the resationship between an assets real rate of return and its risk,

Question

Because of the resationship between an assets real rate of return and its risk, one would expect o tnd ll of thf lolowing, except one which one? OA. Corporate stocks have higher rates of return than U.S. Treasury bonds OB. Corporate stocks have higher rates of return than U.S. Treasury bills OC. Corporate stocks have higher rates of returm than corporate bonds 0 D. Stocks of smaller companies have higher expected rates or return than stocks of larger companies O E. Mutual funds including stucks of companies in politically volatile developing countries do not have as high a rate of return as mutual funds restricted to stocks of companies in developed economies Click to select your answer

Explanation / Answer

Corporate Stocks always have higher return than risk free assets such as US treasury stocks and US treasury bills

Corporate stocks have higher return than corporate bonds

Stocks in small countries have higher potential for growth than that of developed countries

But Mutual funds with stocks including from highly volatile country should produce higher expected return than that of developed economies

Hence Option E is False

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