A Stock Has an Expected Return of 15 Percent and a Standard

question 1

Multiple Choice

A stock has an expected return of 15 percent and a standard deviation of 20 percent.Long-term Treasury bonds have an expected return of 9 percent and a standard deviation of 11 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:

Piaget

A Swiss psychologist renowned for his pioneering work in child development, specifically his theory of cognitive development.

Formal Operational Stage

A stage in Piaget's theory of cognitive development where individuals acquire the ability to think abstractly and reason logically.

Physical Environment

The external surroundings and conditions in which an organism lives, including natural and man-made environments.

Lev Vygotsky

A Russian psychologist known for his work on cognitive development, particularly the social development theory which emphasizes the role of social interaction in the development of cognition.