Assume Share a Has a Standard Deviation of 0

question 60

True/False

Assume Share A has a standard deviation of 0.21 while Share B has a standard deviation of 0.10.If both Share A and Share B must be held in isolation, and if investors are risk averse, we can conclude that Share A will have a greater required return.However, if the assets could be held in portfolios, it is conceivable that the required return could be higher on the low standard deviation stock.

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Definitions:

Held for Sale

Assets or business segments classified as being available for immediate sale and expected to be sold within one year.

Normal Balance

The typical or expected balance of an account in double-entry bookkeeping, which is either debit for assets and expenses or credit for liabilities, equity, and revenue.

Accumulated Depreciation

The total amount of depreciation that has been charged on an asset since it was acquired, representing its decrease in value.

Land Acquired

The process of purchasing land to be used for business operations or investment, which is recorded as a fixed asset on the balance sheet.