Which of the Following Pairs of Portfolios Exemplifies the Risk-Return

question 130

Multiple Choice

Which of the following pairs of portfolios exemplifies the risk-return tradeoff?

• A)For Portfolio A, the average return is 6 percent and the standard deviation is 15 percent; for Portfolio B, the average return is 6 percent and the standard deviation is 25 percent.
• B)For Portfolio A, the average return is 5 percent and the standard deviation is 15 percent; for Portfolio B, the average return is 8 percent and the standard deviation is 15 percent.
• C)For Portfolio A, the average return is 5 percent and the standard deviation is 25 percent; for Portfolio B, the average return is 8 percent and the standard deviation is 15 percent.
• D)For Portfolio A, the average return is 5 percent and the standard deviation is 15 percent; for Portfolio B, the average return is 8 percent and the standard deviation is 25 percent.

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Definitions:

Tacit Collusion

A form of collusion among competing firms in an industry to raise prices or slow production informally without a direct agreement.

Price Leadership

A pricing strategy where a dominant firm in the market sets the price of goods or services, and other competitors follow.

Tacit Collusion

An unofficial agreement among competitors to limit competition and keep prices high, without explicit communication or legal contracts.

Price Leadership

A strategy where the leading firm in a market sets the price of goods or services, and other firms in the market follow suit.