If Investors Are Risk Averse and Hold Only One Stock

question 97

True/False

If investors are risk averse and hold only one stock, we can conclude that the required rate of return on a stock whose standard deviation is 0.21 will be greater than the required return on a stock whose standard deviation is 0.10.However, if stocks are held in portfolios, it is possible that the required return could be higher on the stock with the low standard deviation.

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Definitions:

Skills

The abilities and expertise that individuals acquire through practice, training, or experience, which enable them to perform tasks effectively.

Strategic Planning Process

A structured and deliberate approach undertaken by organizations to define their strategy or direction and make decisions on allocating resources to pursue this strategy.

Human Resource Management

The strategic approach to managing people in an organization, focusing on policies and systems to maximize employee performance and well-being.

Strategic Vision

A statement about where the company is going and what it can become in the future; clarifies the long-term direction of the company and its strategic intent.