Question
1. Which statement is the most correct regarding investment returns and their level of risk? a. Higher risk investments may provide lower actual levels of
1. Which statement is the most correct regarding investment returns and their level of risk?
a. Higher risk investments may provide lower actual levels of return (ex-post) than risk free investments over the short- or long-term.
b. A risk-free investment never has the highest actual return ex-post.
c. Investors should invest in risk-free assets when they want to earn the highest projected ex-ante returns over the long-run.
d. All of these answers are correct.
e. Riskier investments generally have the lower expected returns (ex-ante) than risk-less alternatives.
f. Compared to lower risk alternatives, higher risk investments always provided higher levels of return (ex-post) over the short term.
2. Stagflation is
a. the combination of high wages and low prices.
b. a combination of high inflation and low or negative economic growth that (like disco) sucks and should stay in the 1970s.
c. the combination of low unemployment and low prices.
d. a combination of high interest rates and low inflation.
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