When Comparing Two Stocks with the Same Standard Deviation but the Different

question 62

True/False

When comparing two stocks with the same standard deviation but the different expected returns,you must compute the coefficient of variation to determine which stock is preferred.

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Definitions:

Realized Gains

Profits earned from the sale of an asset, which exceed the asset's purchase price, recognized in the company's financial statements.

Fair Value

Fair value is the estimated price at which an asset or liability could be traded in a fair transaction between willing parties, other than in a forced or liquidation sale.

Bond Investments

Purchasing debt securities issued by corporations or governments, where the investor lends money in exchange for interest payments and the return of the bond's face value at maturity.

Short-Term Debt

Borrowings that are due for repayment within one fiscal year or operating cycle.