The Distributions of Rates of Return for Companies AA and BB

question 101

True/False

The distributions of rates of return for Companies AA and BB are given below:

We can conclude from the above information that any rational,risk-averse investor would be better off adding Security AA to a well-diversified portfolio over Security BB.

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Definitions:

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its share price.

Market Price

The current amount at which an asset or service can be bought or sold.

Dividends Per Share

Measures the extent to which earnings are being distributed to common shareholders.

Liquidity

The simplicity of turning an asset into cash without impacting its market value.