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I’m putting all my savings into stocks because stocks always outperform other types of investments over the long term
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I’m putting all my savings into stocks because stocks always outperform other types of investments over the long term
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Mathematics
3 years
2021-08-14T19:09:01+00:00
2021-08-14T19:09:01+00:00 1 Answers
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Incomplete question. The full question read;
Decide whether the following statement makes sense (or is clearly true) or does not make sense (or is clearly false). Explain your reasoning.
I’m putting all my savings into stocks because stocks always outperform other types of investments over the long term.
Choose the correct answer below.
A. The statement does make sense because stocks historically outperform bonds and cash over the long term and investing in stocks is high-risk, which offers higher returns.
B. The statement does not make sense because although stocks historically outperform bonds and cash over the long term, investing in stocks is high-risk and there is no guarantee that the investment will yield a high return.
C. The statement does make sense because stocks are a low-risk investment, offering predictable low returns.
D. The statement does not make sense because stocks never outperform bonds and cash over the long term.
Answer:
B. The statement does not make sense because although stocks historically outperform bonds and cash over the long term, investing in stocks is high-risk and there is no guarantee that the investment will yield a high return.
Step-by-step explanation:
Of course, the statement does not make sense because it does clearly say the reality about stocks. By saying “stocks always outperform” other investment types it hides the possibility of losses from stock investments.
For example, a company’s stock may be negatively affected as a result of employee layoffs or unexpected company scandals. Hence, there is no guarantee that the investment will yield a high return.