A Stock Has an Expected Return of 12 Percent and a Standard

question 9

Multiple Choice

A stock has an expected return of 12 percent and a standard deviation of 20 percent.Long-term Treasury bonds have an expected return of 9 percent and a standard deviation of 15 percent.Given this data,which of the following statements is correct?

• A) The two assets have the same coefficient of variation.
• B) The stock investment has a better risk-return trade-off.
• C) The bond investment has a better risk-return trade-off.
• D) Both investments have the same diversifiable risk.

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Definitions:

Spoken Language

A form of communication that uses vocalizations to convey meaning between individuals.

Deaf

The condition of lacking the sense of hearing to a degree that impairs the ability to process linguistic information through the ear, with or without a hearing aid.

Wernicke's Area

A region of the brain that is important for language development. It is located on the left temporal lobe and is responsible for the comprehension of speech.

Cerebral Cortex

The outer layer of neural tissue of the cerebrum in the brain, playing a key role in memory, attention, perceptual awareness, thought, language, and consciousness.