Of the Following, Stock ________ Has the Greatest Level of Total

question 64

Multiple Choice

Of the following, Stock ________ has the greatest level of total risk and Stock ________ has the highest risk premium.
$\begin{array}{ccc}\text { Stock}&\text { Beta } &\text { Standard deviation }\\\text { A } & 1.09 & 11\% \\\text { B } & .96 & 13\% \\\text { C } & 1.24 & 18 \% \\\text { D } & 1.13 & 26\% \\\text { E } & .87 & 9\%\end{array}$

• A)A; B
• B)B; E
• C)C; D
• D)D; C
• E)C; E

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Definitions:

Dividend Policy

A company's approach to distributing profits back to its shareholders in the form of dividends.

Clientele Effect

A phenomenon where the types of investors attracted to a company's stock are affected by the company's dividend policy or other financial strategies.

Investors

Individuals or institutions that allocate capital with the expectation of receiving financial returns, encompassing various types such as retail and institutional investors.

Retained Earnings

The portion of a company's profit kept in the business after dividends are paid, used for reinvestment or paying down debt.