The Following Equally Likely Outcomes Have Been Estimated for the Returns

question 14

Multiple Choice

The following equally likely outcomes have been estimated for the returns on Portfolio J and Portfolio M:
-Refer to the information above. Which of the two portfolios is riskier?

• A)Portfolio M since it has the possibility of a negative return
• B)Portfolio M since its returns are more widely dispersed around the expected return
• C)Portfolio J since it has the higher expected return
• D)Both portfolios are equally risky since the possible returns of each are equally likely to occur.

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Definitions:

Reinterpret

To consider or represent something in a new or different way.

Analogical Representation

A form of cognitive representation where one idea, situation, or aspect is understood in terms of its similarity to another.

Satellite Weather Map

A graphical representation of meteorological data collected from satellites, showing weather patterns and conditions over large geographic areas.

Directed Thinking

Focused, goal-oriented thought processes that aim to solve specific problems.