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:

Spoken Language

A form of human communication that is based on the use of speech sounds for the purpose of conveying messages and information.

Free Association

A psychoanalytic process in which the patient verbally shares thoughts, words, or images as they come to mind, without censorship.

Non-Verbal Behaviour

Communication without the use of spoken language, involving gestures, facial expressions, body language, and other physical cues.

Discourse

Entire communicative event or episode located in a situational and sociohistorical context.