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:

Price Increases

A rise in the cost of goods or services over a period, often due to factors like inflation, increased costs of production, or supply and demand shifts.

Higher Costs

Situations where the expenses associated with producing goods or services are elevated, often reducing profitability.

Business Firms

Business firms are entities that engage in professional, commercial, or industrial activities with the aim of generating profits from their operations.

Housing Market

The market segment covering the buying, selling, and renting of residential properties.