Final answer:
A 10-year rolling period return captures how often stocks outperform bonds in ten-year windows, supporting risk management statements. Stocks have historically higher average returns than bonds due to their volatility and potential for growth or decline, while bonds offer less fluctuation compared to the stable nature of savings accounts.
Step-by-step explanation:
When evaluating the performance of investments over time, analysts often use various measures to assess risk and return. Specifically, the 10-year rolling period return is a useful metric that can help investors understand how often stocks outperform bonds over successive ten-year periods. To support risk management statements such as "in 80% of the possible ten-year windows, stocks outperformed bonds," the 10-year rolling period return analysis would be included. This shows that, over a sustained period of time, stocks have an average return higher than bonds due to their inherently higher volatility and potential for substantial growth or decline, as evidenced by historical market patterns including the large fluctuations seen in 2008 and 2009. Unlike stocks, the value of a bond fluctuates less but more than that of a savings account, which remains relatively stable. An understanding of risk and return is key, as a high-risk investment often commands a higher average return to justify taking on the additional risk.