You Observe the Following Information Regarding Companies X and Y

question 93

Multiple Choice

You observe the following information regarding Companies X and Y:
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-Company X has a higher expected return than Company Y.
-Company X has a lower standard deviation of returns than Company Y.
-Company X has a higher beta than Company Y.
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Given this information,which of the following statements is CORRECT?

• A) Company X has more diversifiable risk than Company Y.
• B) Company X has a lower coefficient of variation than Company Y.
• C) Company X has less market risk than Company Y.
• D) Company X's returns will be negative when Y's returns are positive.
• E) Company X's stock is a better buy than Company Y's stock.

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Definitions:

Doublet

A pattern in spectroscopy indicating two adjacent peaks, often associated with the spin of a nucleus affecting a neighboring nucleus.

NMR Spectrum

A representation of the nuclear magnetic resonance absorption by nuclei in a sample.

Isobutyl Acetate

An organic compound and ester formed from the reaction of isobutanol with acetic acid, commonly used as a solvent and in flavorings.

Splitting Patterns

Describes how the peaks in an NMR spectrum are divided into multiple sub-peaks due to interactions between non-equivalent hydrogen atoms in a molecule, revealing its structure.