Which of the Following Pairs of Portfolios Exemplifies the Risk-Return

question 130

Multiple Choice

Which of the following pairs of portfolios exemplifies the risk-return tradeoff?

• A)For Portfolio A, the average return is 6 percent and the standard deviation is 15 percent; for Portfolio B, the average return is 6 percent and the standard deviation is 25 percent.
• B)For Portfolio A, the average return is 5 percent and the standard deviation is 15 percent; for Portfolio B, the average return is 8 percent and the standard deviation is 15 percent.
• C)For Portfolio A, the average return is 5 percent and the standard deviation is 25 percent; for Portfolio B, the average return is 8 percent and the standard deviation is 15 percent.
• D)For Portfolio A, the average return is 5 percent and the standard deviation is 15 percent; for Portfolio B, the average return is 8 percent and the standard deviation is 25 percent.

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Definitions:

Bakes

Refers to the process of cooking food by dry heat, typically in an oven.

Variable Costs

Costs that vary in proportion to the volume of goods or services produced.

Capital

Resources or assets used for the production of goods and services, often including tools, machinery, and buildings.

Mixers

Devices used for blending ingredients together, commonly found in cooking, baking, and cocktail making.