Answered

Discover the answers you need at Westonci.ca, a dynamic Q&A platform where knowledge is shared freely by a community of experts. Get quick and reliable solutions to your questions from knowledgeable professionals on our comprehensive Q&A platform. Get immediate and reliable solutions to your questions from a community of experienced professionals on our platform.

While the evidence suggests that over long periods of time that stocks will outperform bonds, individuals with a long-term investment horizon may still choose to invest in bonds. Is this rational behavior? Why or why not?

Sagot :

anthougo

Answer:

Stocks and Bonds

Yes.  It is a rational behavior for individuals with a long-term investment horizon to choose to invest in bonds rather than investing in stocks despite the overwhelming "evidence that suggests that over long periods of time stocks still outperform bonds."

Rational behavior involves making rational choices that provide optimal levels of benefit or utility for the individual. People who make rational choices would rather choose bonds with lower risks and returns than stocks with higher risks and returns.

Explanation:

Every rational investor would prefer to reduce her risk exposure instead of increasing it.  Every investor is also aware that  investments with higher risks attract higher returns.  However, determining the certainty of the returns is difficult.

Thank you for trusting us with your questions. We're here to help you find accurate answers quickly and efficiently. We hope you found what you were looking for. Feel free to revisit us for more answers and updated information. We're glad you chose Westonci.ca. Revisit us for updated answers from our knowledgeable team.