Question

Since approximately 1900, historical evidence suggests that investing in common stocks has resulted in relatively high cumulative annual returns with (relative to bonds or bills asset classes)

		approximately the same annual variation (risk) as bonds
		relatively little annual variation, i.e. low risk
		no annual variation
		none of the alternative responses are accurate
		relatively high annual variation, i.e., high risk

Answer 1

Correct answer: relatively high annual variation, i.e., high risk

Common stocks has high annual variation in prices i.e high risk because stocks market value completely depend upon the market force ( demand and supply of stock in the market).

On the other hand, Bond or Bills are fixed interest rate instruments and fluctuation in Bond value is quite low as compared to common stock.