Which of the Following Measures Captures the Effects of Both

question 55

Multiple Choice

Which of the following measures captures the effects of both risk and return, which makes it a better measure than standard deviation for evaluating stand-alone risk in situations where investments differ with respect to both their amounts of total risk and their expected returns?

• A)Probability distribution of the investment's returns
• B)Expected average rate of returns of the investment
• C)Correlation coefficient of one investment with another investment
• D)Coefficient of variation
• E)Beta coefficient

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Definitions:

Systematic Desensitization

A behavioral therapy technique used to reduce phobias and anxieties through gradual exposure to the feared object or situation paired with relaxation exercises.

Snake Phobia

An intense, irrational fear of snakes, which can cause significant anxiety and avoidance behaviors.

Lithium

A chemical element used as a medication to treat and prevent episodes of mania in people with bipolar disorder, acting to stabilize mood.

Bipolar Disorder

A mental health condition characterized by extreme mood swings, including emotional highs (mania or hypomania) and lows (depression).