The Rate of Return of Certain Investments Increases as the Risk

question 88

Multiple Choice

The rate of return of certain investments increases as the risk factor of the investment increases. An investment with a risk factor of 2 has a rate of return of 5.0%. An investment with a risk factor of 24 has a rate of return of
12) 0%. What is the average rate of return per unit of risk?

• A) 3.14% per unit risk
• B) 1.90% per unit risk
• C) 0.53% per unit risk
• D) 0.32% per unit risk

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Definitions:

Margin Of Error

The range within which the true value lies in statistical sampling, with a certain level of confidence.

Confidence Intervals

A span of numbers that predicts the actual value of a population statistic within a certain confidence level.

Margin Of Error

An expression of the amount of random sampling error in a survey's results, defining a range within which the true population parameter is expected to lie.

T-Score

A standardized score that indicates how many standard deviations an element is from the mean of a distribution.