The Expected Rate of Return and Standard Deviations, Respectively for Four

question 13

Multiple Choice

The expected rate of return and standard deviations, respectively for four stocks are given below: $$\begin{array} { l l } \mathrm { OPQ } & 11\%,8\%\\\mathrm { RST } & 11\%,9 \% \\\mathrm { UVW } & 12\%,10 \% \\\mathrm { XVZ } & 12 \% ,8\%\end{array}$$ Which investment offers the highest expected return relative to its standard deviation?

• A) OPQ
• B) RST
• C) UVW
• D) XYZ

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Definitions:

Direct Method

A cash flow statement presentation that lists specific types of cash receipts and payments, used to reveal actual cash flow activities.

Accounts Receivable

Indicates the funds to be received by a business for credit sales made to customers, reflecting potential income.

Direct Method

A cash flow statement calculation method that lists the major operating cash receipts and payments, showing direct cash flows from operating activities.

Common Stock

Equity ownership in a corporation, with rights to vote on corporate matters and to receive dividends.