Because of Differences in the Expected Returns on Different Investments

question 16

True/False

Because of differences in the expected returns on different investments, the standard deviation is not always an adequate measure of risk.However, the coefficient of variation adjusts for differences in expected returns and thus allows investors to make better comparisons of investments' stand-alone risk.

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Definitions:

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, free entry and exit, and perfect information, resulting in firms being price takers.

Price

The amount of money required to purchase a good or service; the value that must be exchanged to acquire a specific product.

Short-run Industry Supply

The total quantity of goods that producers in an industry are willing and able to sell at different prices in a short period, without changing production capacity.

Perfectly Competitive Market

A theoretical market structure characterized by infinite buyers and sellers, homogenous products, and no barriers to entry or exit.