Final answer:
The expected average annual rate of return for long-term corporate bonds is lower than that of stocks. Historical data shows stocks averaged a total annual return with capital gains of 13.58% from 1950-2012. Bonds typically provide less volatility and thus lower returns compared with stocks.
Step-by-step explanation:
When considering the average annual rate of return for a portfolio of long-term corporate bonds, historical data indicates a general pattern where stocks have provided a higher return compared to bonds, and bonds yield a higher return than savings accounts. The total return on stocks includes both dividends and capital gains, while the return on bonds is influenced primarily by interest rate fluctuations and credit risk associated with corporations. It's important to note that while high-risk investments may offer the chance for higher returns, they also come with the possibility of lower returns, highlighting the range of outcomes inherent in investing.
Based on the general idea that bonds have lesser volatility and thus typically lower returns than stocks, the expected average annual rate of return for long-term corporate bonds would be lower than the capital gains from stocks which averaged 13.58% from 1950-2012. However, specific data on average returns for corporate bonds for the 1926–2019 period is not provided, and actual returns would depend on the market conditions, interest rate environment, and the specific types of corporate bonds held within the portfolio.