Which One of the Following Statements Is Correct Concerning the Historical

question 203

Multiple Choice

Which one of the following statements is correct concerning the historical standard deviations of asset classes over the period 1957-2005?

• A) The standard deviation of small-company stocks is almost three times the average annual return for those stocks.
• B) The standard deviation of large-company stocks demonstrates they have more risk than any other category.
• C) The historical standard deviation of long-term corporate bonds is less than the standard deviation of large-company stocks.
• D) Long-term corporate bonds are more volatile than Canadian Treasury bills as shown by their standard deviations.
• E) The historical standard deviation of large-company stocks is greater than the standard deviation of small-company stocks.

---

Definitions:

Ford Motor Company

A multinational automaker headquartered in the United States, known for producing and selling automobiles and commercial vehicles under the Ford brand and luxury cars under the Lincoln brand.

Horizontal Analysis

An analytical approach to finance, examining historical financial records from several periods to spot growth trends and patterns.

Vertical Analysis

A technique for examining financial statements by presenting each item in the main categories of accounts (assets, liabilities, and equity) on a balance sheet as a fraction of the overall category.

Balance Sheet Data

Information related to the assets, liabilities, and stockholders' equity of a company as presented in its balance sheet at a specific date.