Final answer:
Investment policies are associated with the cash value growth potential based on stock and bond performance. Stocks generally have a higher average return than bonds and savings accounts, while bonds offer more stability. These investment options vary in growth potential and risk.
Step-by-step explanation:
Cash value growth potential based upon stock and bond performance is commonly associated with investment policies. When considering the growth potential of cash value, it is important to understand that stocks generally have a higher average return than bonds, and bonds have a higher average return than a savings account. Stocks have the potential for significant growth but also come with a higher level of risk due to their volatility. Bonds, on the other hand, offer more stability but generally have lower returns compared to stocks. Savings accounts have the lowest growth potential but are considered the safest option.
For example, stocks can experience significant fluctuations in value in a given year, such as the S&P 500 increasing by 26% in 2009 after declining by 37% in 2008. This level of growth and volatility makes stocks appealing to investors seeking higher returns, but it also comes with a higher level of risk. Bonds, on the other hand, depend largely on interest rate fluctuations and offer more stability than stocks. While they may not experience the same level of growth as stocks, they can still provide steady returns.