The Distributions of Rates of Return for Companies AA and BB

question 64

True/False

The distributions of rates of return for Companies AA and BB are given below:​ $\begin{array}{lcccc} \text { State of } & \text {Probability of } \\{\text { Economy }} & \text { State Occurring } & \text { A.A } & \text { B B } \\\hline \text { Boom } & 0.2 & 30 \% & -10 \% \\\text { Normal } & 0.6 & 10 \% & 5 \% \\\text { Recession } & 0.2 & -5 \% & 50 \%\end{array}$ We can conclude from the above information that any rational risk-averse investor will add Security AA to a well-diversified portfolio over Security BB.

---

Definitions:

Heart Rate

The number of heartbeats per unit of time, usually measured in beats per minute (bpm), indicating cardiovascular health and fitness.

Brachial Plexus

A network of nerve fibers that runs from the spine through the neck, the armpit region, and into the arm, providing movement and sensation to the arm, shoulder, and hand.

Musculocutaneous

Relating to both muscle and skin, often referring to nerves or tissues connecting or affecting both muscle and skin areas.

Femoral

Relating to the femur or thigh, which is the longest and strongest bone in the body.