The Distributions of Rates of Return for Companies AA and BB

question 24

True/False

The distributions of rates of return for Companies AA and BB are given below:
We can conclude from the above information that any rational, risk-averse investor would be better off adding Security AA to a well-diversified portfolio over Security BB.

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Definitions:

Hippocampus

A crucial part of the brain involved in memory formation and spatial navigation.

Receny Effect

The tendency to remember and give greater importance to the most recently presented information over older information.

Primacy Effect

A cognitive phenomenon where items or information presented first are remembered better than those presented later.

Short-term Memory Capacity

The amount of information that can be held in the short-term memory for a brief period, typically regarded as lasting 20 to 30 seconds.