The Standard Deviation of the Returns of Stock a Is

question 7

Multiple Choice

The standard deviation of the returns of Stock A is 45.9 percent, and the standard deviation of the returns of Stock B is 52.7 percent. Which of the following statements about the stocks is correct?

• A)Stock A has a wider (more dispersed) probability distribution than Stock B, and hence lower total risk.
• B)Stock A has a tighter probability distribution than Stock B, and hence lower total risk.
• C)Stock B has a wider (more dispersed) probability distribution than Stock A, and hence lower total risk.
• D)Stock B has a tighter probability distribution than Stock A, and hence lower total risk.
• E)Stock B has a lower risk than Stock A, but nothing can be said about their probability distributions.

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Definitions:

Culture-Bound

Conditions or phenomena that are understood or perceived within the context of a specific culture.

Researchers

Individuals who conduct systematic investigation to establish facts and reach new conclusions in various fields of study.

Age-Related Memory

Refers to changes in memory function that occur as part of the normal aging process, often characterized by slight declines in the ability to remember new information or retrieve memories quickly.