Question

In general, which of the securities below has the highest expected return on investment?

Group of answer choices

U.S government bonds

Corporate bonds

Preferred stock

Common stock

Answer 1

highest expected rate of return would be from investment which will have the highest rate of risk, so since common stocks have the highest risk among them, there would be a highest chance of investment return on the common stocks.

Return on US government bonds and US corporate bonds are are almost very similar in nature and they cannot give phenomenal returns while preferred stocks have also limited rate of return but common stocks will have the highest probability of making the best return.

the correct answer would be option(d) common stock