On average, stocks have delivered higher returns than bonds in the long run.

Indicate whether the statement is true or false

True, stocks have historically delivered higher returns than bonds because there is a greater risk that, if the company fails, all of the stockholders' investment will be lost. On the flip side, however, there is a return to stockholders that could potentially dwarf what they could earn investing in bonds. Stock investors will judge the amount they are willing to pay for a share of stock based on the perceived risk and the expected return potential - a return potential that is driven by earnings growth.