If Investors Are Risk Averse and Hold Only One Stock,we

question 145

True/False

If investors are risk averse and hold only one stock,we can conclude that the required rate of return on a stock whose standard deviation is 0.21 will be greater than the required return on a stock whose standard deviation is 0.10.However,if stocks are held in portfolios,it is possible that the required return could be higher on the stock with the lower standard deviation.

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Definitions:

Conscious Awareness

Conscious Awareness is the mental state of being fully alert, aware, and attentive to one's thoughts, feelings, and surroundings.

Introspection

The examination of one's own thoughts and feelings, a method often used in psychology.

Blindsight

A phenomenon where individuals with visual cortex damage demonstrate a response to visual stimuli without consciously perceiving them.

Automatization

The process of making a task, process, or operation automatic or capable of functioning independently of human control.