Substantially outperform bond investments

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We have seen that in the long run that stock investments tend to substantially outperform bond investments. However, it is not all uncommon to observe investors with long horizons holding only bonds. Are such investor irrational? Why or why not?

What are the implications of the efficient markets hypothesis for investors who buy and sell stocks in an attempt to "beat the market"?

In broad terms, why are some risks diversifiable? Why are some risks nondiversifiable? Does this mean that an investor can control the level of unsystematic risk in a portfolio, but not the level of systematic risk?

Please provide specific examples to support your arguments.

Reference no: EM132886606

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