If Three Investment Alternatives All Have Some Degree of Risk

question 72

Multiple Choice

If three investment alternatives all have some degree of risk and different expected returns, which of the following measures could best be used to rank the risk levels of the projects?

• A) The coefficient of correlation
• B) The coefficient of variation
• C) The standard deviation of returns
• D) The net present value

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Definitions:

Standard Deviation

A measure of the dispersion or variability around the mean of a set of data, used in finance to quantify the risk of investment returns.