The Figures Below Show Plots of Monthly Excess Returns for Two

question 6

Multiple Choice

The figures below show plots of monthly excess returns for two stocks plotted against excess returns for a market index. Which stock is riskier to a nondiversified investor who puts all his money in only one of these stocks?

• A) Stock A is riskier.
• B) Stock B is riskier.
• C) Both stocks are equally risky.
• D) The answer cannot be determined from the information given.

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Definitions:

Neurotransmitters

Chemical substances that transmit signals across a synapse from one neuron to another in the brain and nervous system.

Synaptic Cleft

The narrow space between the terminal button of a neuron and the dendrite or cell body of another neuron where neurotransmitters are released.

Inhibitory Postsynaptic

Referring to a postsynaptic potential that makes a neuron less likely to generate an action potential, essentially serving to inhibit neuronal firing.

Neuron

A nerve cell that is the basic building block of the nervous system, responsible for receiving and transmitting information through electrical and chemical signals.