____________ are usually expected to produce significant gains.
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A. B. C. D.C
The correct answer is D. Growth stocks.
Growth stocks are those of companies that are expected to have higher-than-average revenue and earnings growth rates compared to the overall market. As a result, growth stocks typically trade at higher price-to-earnings (P/E) ratios than the market average. The expectation is that as the company continues to grow and become more profitable, the stock price will also rise, providing significant gains to investors.
In contrast, defensive stocks and income stocks are typically less volatile and may offer lower returns but provide a steady income stream. Defensive stocks are those of companies that provide essential products or services, such as utilities or healthcare, and tend to be less affected by economic cycles. Income stocks typically offer higher dividends, making them attractive to investors seeking regular income from their investments.
Blue chips are stocks of well-established companies that have a history of stable earnings and dividends, strong financials, and a market capitalization of at least $10 billion. While blue-chip stocks can offer consistent returns, they may not necessarily produce significant gains as growth stocks can.
Overall, while each type of stock has its own unique characteristics and investment potential, growth stocks are generally expected to provide the highest potential for significant gains over the long term.