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

question 41

Multiple Choice

The expected returns for Stocks A, B, C, D, and E are 7 percent, 10 percent, 12 percent, 25 percent, and 18 percent, respectively. The corresponding standard deviations for these stocks are 12 percent, 18 percent, 15 percent, 23 percent, and 15 percent, respectively. Which one of the securities should a risk-averse investor purchase if the investment will be held in isolation (by itself) ?

• A)A
• B)B
• C)C
• D)D
• E)E

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Definitions:

Friendliness

A behavior or attitude that is warm, welcoming, and ready to engage in positive interactions with others.

Sympathetic Nervous System

Part of the autonomic nervous system that activates the fight or flight response during perceived threats, by increasing heart rate, blood pressure, and releasing adrenaline.

Parasympathetic Nervous System

A division of the autonomic nervous system responsible for relaxation and conservation of energy in the body.

Flashbacks

Sudden, intense re-experiencings of past events or traumas, often associated with PTSD.