Which one of these is considered to be the safest investment?

A. U.S. Treasury bonds

B. Common stock

C. U.S. Treasury bill

D. Preferred stock

The idea that investors in a common stock may expect a lower total return if they purchase a

stock with limited price volatility rather than one with high price volatility suggests that:

A. investors are irrational.

B. there is a relationship between risk and return.

C. real rates of return will be lower during periods of price stability.

D. stocks should be avoided when inflation is low.