Rank the Following Three Stocks by Their Total Risk Level

question 66

Multiple Choice

Rank the following three stocks by their total risk level, highest to lowest. Night Ryder has an average return of 14 percent and standard deviation of 30 percent. The average return and standard deviation of WholeMart are 12 percent and 25 percent; and of Fruit Fly are 25 percent and 40 percent.

• A) Fruit Fly, Night Ryder, WholeMart
• B) Night Ryder, WholeMart, Fruit Fly
• C) WholeMart, Fruit Fly, Night Ryder
• D) WholeMart, Night Ryder, Fruit Fly

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Definitions:

Perpetual Inventory System

An inventory management method that records the sale or purchase of inventory immediately through electronic tracking.

Gross Method

An accounting approach for recording purchases at the gross invoice amount before any trade discounts are taken.

Merchandising Transactions

Business activities related to the buying and selling of merchandise, which may involve inventory purchases, sales transactions, and the return of goods.

Journal Entries

Journal entries are the records of financial transactions in the accounting books, marking the initial step in the accounting cycle, detailing debits and credits.