Question

which of the following statements is true?
a. bonds have more risk than stocks, but offer more return.
b. stocks have more risk than bonds, but offer more return.
c. stocks tend to offer a greater risk, while bonds tend to offer a greater return.
d. bonds tend to offer a greater risk, while bonds tend to offer a greater return.

please select the best answer from the choices provided

○ a
○ b
○ c
○ d

Explanation:

In finance, stocks represent partial ownership in a company, so their value is highly tied to the company's performance, market conditions, and volatility, making them riskier. Bonds are debt instruments where issuers promise fixed interest payments and principal repayment, so they are more stable. In exchange for the higher risk of stocks, investors expect and typically receive higher long-term average returns compared to bonds. Options a, c, and d incorrectly reverse the risk-return relationship between stocks and bonds, and option d also contains an internal error by referencing bonds twice.

Answer:

b. Stocks have more risk than bonds, but offer more return.