Question: Multiple choice) Which statements below are correct about financial asset returns? A higher inflation expectation generally reduces the present values of both stocks and bonds.

Multiple choice) Which statements below are correct about financial asset returns?

A higher inflation expectation generally reduces the present values of both stocks and bonds.

In the long run, holding riskier assets provide higher average returns.

In each year, the return of small company stocks is higher than that of Treasury bills.

Everyone should hold stocks instead of bonds because in the long-run expected returns of stocks are higher.

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