The Expected Returns for Stocks A, B, C, D, and E

question 53

Multiple Choice

The expected returns for Stocks A, B, C, D, and E are 7%, 10%, 12%, 25%, and 18% respectively. The corresponding standard deviations for these stocks are 12%, 18%, 15%, 23%, and 15% respectively. Based on their coefficients of variation, which of the securities is least risky for an investor? Assume all investors are risk-averse and the investments will be held in isolation.

• A) A
• B) B
• C) C
• D) D
• E) E

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Definitions:

GH Therapy

Treatment with synthetic growth hormone to promote growth in children and adults with growth hormone deficiency.

Diabetes Insipidus

A rare disorder characterized by intense thirst and the excretion of large amounts of urine, unrelated to diabetes mellitus.

Polyuria

The condition of producing abnormally large volumes of dilute urine, often indicative of underlying health issues such as diabetes or kidney disease.

Desmopressin Acetate

A synthetic hormone used to treat conditions like diabetes insipidus, bedwetting, and to manage bleeding in certain disorders, by limiting the amount of water eliminated in urine.