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According to the research, for the duration from 1926 to 2015: A. The real rate of return on U.S. Treasury bills has been negative. B. Small company stocks have underperformed large company stocks. C. Long-term government bonds have produced higher returns than long-term corporate bonds. D. The risk premium on long-term corporate bonds has exceeded the risk premium on long-term government bonds. E. The risk premium on large company stocks has exceeded the risk premium on small company stocks.

Respuesta :

Parrain

Answer: D. The risk premium on long-term corporate bonds has exceeded the risk premium on long-term government bonds.

Explanation:

It has been shown that between 1926 and 2015, the risk premium attached to long term corporate bonds is more than those of comparable government bonds and this is supported by financial theory.

Government bonds are traditionally meant to be possess less risk because they are backed by the full faith of the government. They will therefore posses a lower risk premium (risk premium is the extra amount paid on a bond to compensate for risk) than corporate bonds because they have less risk than corporate bonds.

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