The textbook provides a history of returns from 1950 through 1999 for four classifications of securities in the United States. Rank the average returns from the highest to lowest over this time period.
A) Large-company stocks, small-company stocks, 3-month U.S. Treasury bills, long-term government bonds
B) Long-term government bonds, 3-month U.S. Treasury bills, small-company stocks, large-company stocks
C) Small-company stocks, large-company stocks, long-term government bonds, 3-month U.S. Treasury bills
D) Large-company stocks, long-term government bonds, small-company stocks, 3-month U.S. Treasury bills
Question 2
What advice should investors heed if markets are efficient?
A) You can earn abnormally large returns by frequently buying and selling whenever you obtain new information.
B) The best-informed traders always beat the market.
C) Mutual funds run by expert managers consistently outperform index funds.
D) Random stock picks will perform as well as a series of hot stock tips over long periods of time.
E) Fundamental analysis is superior to technical analysis.
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