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:

Foreign Exchange Market

A global marketplace for exchanging national currencies against one another, facilitating international trade and investment.

Mexican Pesos

The currency of Mexico, symbolized as $ or MXN, used for all financial transactions within the country.

Price of Foreign Exchange

The rate at which one currency can be exchanged for another, often determined by supply and demand in the foreign exchange market.

U.S. Dollar

A major global currency issued by the United States, commonly used in international financial transactions and as a reserve currency.