Suppose Jon decides to purchase either a long‑term Treasury bond or a share of stock from a company in the Dow Jones Industrial Average. Assume that either one will behave similarly to the average security in their class, and ignore the effect of market conditions. 1.) Which security is more likely to lose most of its value in the next year after Jon purchases it?

A) the stock

B) the probabilities of major loss are the same

C) they are both guaranteed to increase in value

D) the bond

2.) Based on historical returns, which security is likely to grow more significantly in value after Jon purchases it?

A) they are both guaranteed to increase in value

B) the stock

C) the probabilities of substantial gain are the same

D) the bond

3) Given the answers to the questions, what advice should be given to Jon if he does not expect to sell the security for at least 20 years?

A) Based on historical returns, the stock will likely outperform the bond over that period.

B) The bond is a safer bet because there is no risk of default.

C) Based on historical returns, the bond will likely outperform the stock over that period.

D) Flip a coin to pick which security to buy.