You Observe the Following Information Regarding Companies X and Y

question 102

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 a lower coefficient of variation than Company Y.
• B) Company X has less market risk than Company Y.
• C) Company X's returns will be negative when Y's returns are positive.
• D) Company X's stock is a better buy than Company Y's stock.
• E) Company X has more diversifiable risk than Company Y.

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Definitions:

Brightness

A perceptual attribute of light sources and colors that enables an observer to judge their intensity or illumination.

Colour Vision

The ability of the eye and brain to distinguish objects based on the wavelengths (or frequencies) of the light they reflect or emit.

Cones

Photoreceptor cells in the retina of the eye responsible for color vision and visual acuity under bright light conditions.

Regulate

To control or maintain the rate or speed of a machine or process so that it operates properly.