You Observe the Following Information Regarding Companies X and Y:​-

question 53

Multiple Choice

You observe the following information regarding Companies X and Y:​- Company X has a higher expected return than Company Y.- Company X has a lower standard deviation of returns than Company Y.- Company X has a higher beta than Company Y.​Given this information,which of the following statements is correct?

• A)Company X has more company-specific risk than Company Y.
• B)Company X has a lower coefficient of variation than Company Y.
• C)Company X has less market risk than Company Y.
• D)Company X's returns will be negative when Y's returns are positive.

Calculate and interpret Z-scores in the context of normally distributed data.

Distinguish between discrete and continuous random variables and their probability distributions.

Understand the relationship between probabilities and areas under the normal curve.

Recognize the significance of the total area under the normal curve being equal to 1.

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Definitions:

Face Value

The nominal value or dollar value printed on a financial instrument, such as a bond or a stock certificate.

Interest Paid

The total amount of interest paid by a borrower to a lender over a particular period for the use of borrowed money.

Bonds Interest Payable

This represents the amount of interest expense that a company owes to its bond investors but has not yet paid.

Annual Bond Interest

The total interest that will be earned on a bond over the course of a year.