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:

Products

Goods or services offered by businesses to consumers, intended to satisfy needs or wants.

Rapid Response

The ability to react quickly and efficiently to unforeseen situations or emergencies.

Leading-Edge Products

Goods or services that represent the most advanced stage of development in their field at the time of release, often incorporating innovative features or technologies.

Unique

Being the only one of its kind; unlike anything else.