Stock a B C D Expected Return 5% 5% 7

question 37

Multiple Choice

Stock A B C D Expected Return 5% 5% 7% 6%
Standard Deviation 10% 12% 12% 11%
Which of the following statements is true?

• A)A is a better investment than B.
• B)B is a better investment than C.
• C)C is a better investment than D.
• D)D is a better investment than C.

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Definitions:

Mental Prototype

A mental image or best example that embodies the most typical characteristics of a particular category or concept.

Satisficing Decisions

Solutions that aim for acceptable results rather than for the best or optimal ones.

Tactical Decisions

Short-term choices made to achieve specific objectives that are part of a larger strategic plan.

Heuristics

Shortcuts or “rules of thumb” that allow us to make judgments and decisions quickly and efficiently.