If Investors Are Risk Averse and Hold Only One Stock

question 97

True/False

If investors are risk averse and hold only one stock, we can conclude that the required rate of return on a stock whose standard deviation is 0.21 will be greater than the required return on a stock whose standard deviation is 0.10.However, if stocks are held in portfolios, it is possible that the required return could be higher on the stock with the low standard deviation.

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Definitions:

Package Insert

A manufacturer’s printed guideline for the use and dosing of a drug; includes the pharmacokinetics, dosage forms, and other relevant information about a drug.

Nonprescription

Referring to drugs or treatments that can be purchased without a doctor's prescription, often used for minor health issues.

Prescribed Drug

A medication that is legally dispensed by a healthcare professional's order to treat a specific condition.

Transcription

The transforming of spoken notes into accurate written form.