A Stock Has an Expected Return of 15 Percent and a Standard

question 5

Multiple Choice

A stock has an expected return of 15 percent and a standard deviation of 20 percent. Long-term Treasury bonds have an expected return of 9 percent and a standard deviation of 11 percent. Given this data, which of the following statements is correct?

• A) The two assets have the same coefficient of variation.
• B) The stock investment has a better risk-return trade-off.
• C) The bond investment has a better risk-return trade-off.
• D) The stock investment and the bond investment have the same diversifiable risk.

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Definitions:

Macromolecules

Large molecules necessary for life, including proteins, nucleic acids, carbohydrates, and lipids, with complex structures and vital roles in biological processes.

Phosphate

A chemical compound that contains the phosphate ion (PO4^3-), which is essential in biological systems for energy transfer and storage.

Intracellular Buffer System

Mechanisms within cells that regulate pH levels, preventing significant variations that could otherwise interfere with cellular function.

Sodium-Potassium Pump

A cellular mechanism that moves sodium ions out of and potassium ions into a cell against their concentration gradients, essential for cellular functions.