If Investors Are Risk Averse and Hold Only One Stock

question 97

True/False

If investors are risk averse and hold only one stock, we can conclude that the required rate of return on a stock whose standard deviation is 0.21 will be greater than the required return on a stock whose standard deviation is 0.10.However, if stocks are held in portfolios, it is possible that the required return could be higher on the stock with the low standard deviation.

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Definitions:

Hereditary Material

Genetic material, such as DNA or RNA, that is passed from parents to offspring, determining inherited traits.

Chromatin

Network of DNA strands and associated proteins observed within a nucleus of a cell.

Surface-Area-To-Volume Ratios

A mathematical ratio that describes the amount of surface area per unit volume of an object or organism, influencing heat loss, gas exchange, and nutrient uptake.

Nucleolus

A prominent structure within the nucleus of a cell, primarily involved in ribosomal RNA synthesis and ribosome biogenesis.