Assume that IBM starts selling common stock and bonds today. The rate of return on bonds is 10%.

a. on average, we expect the rate of return on common stock to be equal to 10%

b. on average, we expect the rate of return on common stock to be greater than 10%

c. on average, we expect the rate of return on common stock to be less than 10%

d. on average, we do not know what to except because it depends on the risk of the firm

e. on average, we do not know what to expect because we do not know the risk and return relationship

Would this answer be (D)? The risk and return relationship are positive, so Im assuming if we dont know the risk of the investment. I cannot know what to expect.