Which of the Following Two Stocks Is More Volatile Based

question 180

Multiple Choice

Which of the following two stocks is more volatile based on historical returns?

• A) A because it has a lower mean
• B) B because it has a higher mean
• C) A because it has a higher standard deviation
• D) B because it has a lower standard deviation
• E) B because it has a higher variance

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Definitions:

Economic Profits

Profits exceeding the opportunity costs of the inputs used in the production process, an indicator of efficiency and effectiveness in resource utilization.

Mean Reversion

Suggests that performance eventually moves back toward the mean or average.

Demand And Supply Shocks

Unexpected events that cause sudden and significant changes in the demand or supply of goods and services in the economy.

Marginal Revenue

The increase in income resulting from the sale of one extra unit of a product or service.