If Stock a Has a Higher Standard Deviation Than Stock

question 18

True/False

If Stock A has a higher standard deviation than Stock B, it will also have a greater coefficient of variation.

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Definitions:

Sustainable Rate

The maximum rate at which a company can grow its earnings without needing additional equity financing while maintaining a constant debt-to-equity ratio.

External Equity

Refers to funds raised from outside the company, typically through issuing new shares to investors.

External Financing

Funds raised from outside the business, including bank loans, equity investments, and bond issues.

Dividend Payout

The portion of the company's earnings paid out to shareholders, usually in the form of dividends.