The Lower the Standard Deviation of Returns on a Security

question 52

Multiple Choice

The lower the standard deviation of returns on a security, the _____ the expected rate of return and the _____ the risk.

• A)lower; lower
• B)lower; higher
• C)higher; lower
• D)higher; higher

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Definitions:

Production Substitute

An alternative product or process that can be used in place of another in production, often to save costs or improve efficiency.

MR = MC

A principle in economics stating that profit maximization occurs when a firm's marginal revenue (MR) equals its marginal cost (MC) of production.

Profits Maximization

The process or strategy aimed at achieving the highest possible profit by a firm within a given period.

Imperfect Competition

All market structures except pure competition; includes monopoly, monopolistic competition, and oligopoly.