If Three Investment Alternatives All Have Some Degree of Risk

question 20

Multiple Choice

If three investment alternatives all have some degree of risk and different expected returns, which of the following measures could best be used to rank the risk levels of the projects?

• A) coefficient of correlation
• B) coefficient of variation
• C) standard deviation of returns
• D) net present value

---

Definitions:

Temporary Price

A price set for a product or service for a limited period before it is expected to change.

Surplus

The situation in which the quantity of a good supplied exceeds the quantity demanded, often leading to lower prices.

Shortage

A market condition when the demand for a product exceeds its supply at a specific price.

Demand and Supply of Wheat

The relationship between the quantity of wheat that producers are willing to sell at various prices and the quantity that consumers are willing to buy.