The Wider the Distribution of an Investment's Returns Over Time

question 81

Multiple Choice

The wider the distribution of an investment's returns over time, the ________ the expected average rate of return and the ________ the expected volatility of those returns.

• A)higher; higher
• B)higher; lower
• C)lower; higher
• D)lower; lower
• E)The distribution of returns does not affect the expected average rate of return.

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Definitions:

Interval Scale

The scale of measurement for a variable if the data demonstrate the properties of ordinal data and the interval between values is expressed in terms of a fixed unit of measure. Interval data are always numeric.

Ratio Scale

The scale of measurement for a variable if the data demonstrate all the properties of interval data and the ratio of two values is meaningful. Ratio data are always numeric.

Nominal Scale

The scale of measurement for a variable when the data are labels or names used to identify an attribute of an element. Nominal data may be nonnumeric or numeric.

Ordinal Scale

A ranking scale used to measure variable where the order of values is significant, but the difference between values is not uniform.