The Chart Below Gives Information for Four Classes of U

question 44

Essay

The chart below gives information for four classes of U.S.securities over the 50-year time period from 1950-1999.Order the securities from highest average annual return to lowest for this time period.Now rank the securities from highest to lowest based on risk.Is the information consistent with what financial theory tells us? Why or why not?

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Definitions:

X-axis

The horizontal axis in a coordinate plane, often used to represent the independent variable in a graph.

Standard Deviations

A measure that quantifies the amount of variation or dispersion of a set of numerical values.

Distribution

In statistics, it refers to the way in which data or values are spread out or distributed across a range of possibilities.

Z Score

A statistical measure illustrating the relation of a value to the mean of its group by detailing it in standard deviations from the mean.