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:

Auditory Decay

Auditory decay refers to the loss or fading of memory traces of sounds in the short-term memory over time without rehearsal.

Prospective Forgetting

Not remembering to carry out some intended action.

Absentmindedness

A form of inattention or forgetfulness where a person might fail to remember or overlook things due to a lack of attention or focus.

Selective Forgetting

The process by which people are able to forget information that causes distress or anxiety, often unconsciously.