Over the Long-Term, the Greater the Volatility in the Returns

question 193

Multiple Choice

Over the long-term, the greater the volatility in the returns on a risky security the:

• A) Lower the average total return.
• B) Greater the average risk premium.
• C) Greater the risk-free rate of return.
• D) Lower the average risk premium.
• E) Lower the average capital gains yield.

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Definitions:

Mean

The average of a set of numbers, calculated by dividing the sum of these numbers by the count of numbers in the set.

Quotient

The result obtained by dividing one quantity by another.

Rounded

The process of adjusting numbers to a specified degree of precision, often to make them simpler or more easily interpreted.

Mean

The mean of a collection of numbers, determined by summing up all the numbers and then dividing by the total number of numbers.